I replaced transfer case motor, 4wd acuator on front differential, and selector switch. The service 4wheel drive light is on and vehicle does not go into 3 wheel drive on 2008 gmc envoy Denali

that 4wheel drive is engaged
If the vehicle is an ALL WHEEL DRIVE vehicle there is a differential in the transfer case and although it is always in 4 wheel drive that differential allows the axles to turn at different speeds like when going over speed bumps
but it has a button to lock that diff up and by having that light on (providing there is no fault) the vehicle now has permanent drive to both axles---a condition not desirable when driving on hard surface as it causes torque wind up in the drive train which causes excessive wear in cv joints , splines, and in the teeth and gears/chain in the transfer case and gear box
take it to an accredited service shop that has experience on your make of vehicle and have the problem properly diagnosed as prolonged use in locked 4 wheel drive is an expensive exercise

The 4WD transfer case encoder motor position sensor or the selector switch may fail causing the service 4WD message to be displayed. Fault code(s) stored in the transfer case control module will be of assistance in determining the exact fault causing the message to be displayed.
I have found out that usually the two ground wires that are attached to the frame right under the front of the driver's door is the culprit that causes the 4wd selector switch in the dash to go bad. Chevy had the bright idea of applying the undercoating and/or not cleaning the point of contact of the ground wires before they bolted them to the frame therefore overtime moisture, dirt and corrosion affects the contacts of the threads of the bolts which are the only source of ground the two sets of wires have. There are 2 things you will need to do. First you will need to take the bolts out and use a wire brush to clean down to the metal of the frame as well as the bold threads and ends of the wire attachments and then reattach the ground wires to the frame (time to complete - less than 5 minutes). Second you will need to replace the 4wd selector switch in the dash. You can purchase this online from Amazon (Dorman 901-062 4-wheel drive switch for $31.15 - no tax or shipping and handling). To replace, gently pull the outer trim of the dash out by using just your fingers. You do not need to completely remove it, just pull it out far enough so that you can pull the old switch out of it slot. Then unplug the two plugins located in the back of the switch. Plug them into the new switch and push the switch back into the slot and then push the trim back into place (time to complete - less than 5 minutes). This should take care of your problem. Most often, people make the mistake of just switching out the dash switch and when that does not correct the problem they then replace the more expensive and time consuming actuator motor and location indicator on the transfer case that does not need to be replaced. I should point out that when the Service 4WD light comes on

There are a few things that would cause this problem.
The first and most common would be the switch itself is bad. the next would be a bad 4wheel drive encoder motor, this is the motor on the transfer case that is used to operate the 4wheel drive. The last would be the 4 wheel drive module.
You will need to do some testing, if the four wheel drive is working and goes in and out of 4 wheel drive then i would say it the switch. if it does not work correctly it may still be the switch or one of the components i listed above.I have enclosed a wiring diagram, you will need to do some testing to check system, first make sure all fuses are good. the fuses that operate the 4wd are listed on diagram, it will also tell you the location of each part. you will need to test front axle actuator and selector motor and switch, you will need a test light and a meter. hope this is helpful, good day.

I have run into to this problem many times on these trucks, i have seen your problem and also where the 4wd high light wont work but 4wd low and 2wd work fine and the 4 wheel drive works fine. on your truck i will bet its the transfer case selector motor.
the motor is what turns the lights on when in the selected mode which goes through the 4wheel module under the dash, this sounds like a bad selector motor and that where i would start. this motor is located on the transfer case, it bolts to the rear of it.here is a picture of it to help you locate it. good day.

replace the 4 wheel drive acuator if in 4wd with selector and the wheels are still free then the acuator is bad even tho you 12v the acuator may not be pulling back to lock in the hub for 4 wd. simply replace it as their is a small spring on the acuater that over time becomes week and can no longer hold the presure that is created when it activated.

What do the lights on the 4x4 selector switch do when you switch to A4WD or $HI or 4LO positions? Do they blink and revert to previous selection? Has the Transfer Case fluid been changed at 50K intervals?
There are actuators on the Transfer Case and Front Differential that control the application of power to the front wheels. These actuators are controlled by the TCCM (Transfer Case Control Module). It takes a qualified 4 wheel drive technician to diagnose these systems.

On the full size, the front actuator is electric, not vacuum.

When in 4wd mode, a switch on top of the transfer case conducts 12 volts out to the actuator. Wire #50 (brown) is the 12v feed, and it conducts to the light blue wire (#900) to the actuator.
When shifted out of 4wd, the switch opens up and no voltage goes to the actuator.

Check voltage at the connector for the front actuator (at the front differential - it looks like a large bullet that threads into the front diff.) If it has 12 volts, the actuator is the problem. If it does not have 12 volts, check the transfer case switch and the power feed to the transfer case.

I'll assume it is the actuator, if the plug to the actuator is getting 12 volts when in 4wd.
The way this actuator works, is it is a sealed chamber that gets heated by voltage. When it heats, the pin in the end swells and pushes a shift fork in the front differential. The shift fork engages a spline on the passenger side of the differential, and boom! you have 4WD.

GM offered an upgrade to this actuator that is a motor instead of a heated device. However, it requires a small harness addition, a spacer, and a new actuator. It is about a $150 to $200 option.

Good luck. The actuator is usually the problem 90% of time but recheck all of the wire harness just to maker sure there is no short before replacing any parts.

On the full size, the front actuator is electric, not vacuum.

When in 4wd mode, a switch on top of the transfer case conducts 12 volts out to the actuator. Wire #50 (brown) is the 12v feed, and it conducts to the light blue wire (#900) to the actuator.
When shifted out of 4wd, the switch opens up and no voltage goes to the actuator.

Check voltage at the connector for the front actuator (at the front differential - it looks like a large bullet that threads into the front diff.) If it has 12 volts, the actuator is the problem. If it does not have 12 volts, check the transfer case switch and the power feed to the transfer case.

I'll assume it is the actuator, if the plug to the actuator is getting 12 volts when in 4wd.
The way this actuator works, is it is a sealed chamber that gets heated by voltage. When it heats, the pin in the end swells and pushes a shift fork in the front differential. The shift fork engages a spline on the passenger side of the differential, and boom! you have 4WD.

GM offered an upgrade to this actuator that is a motor instead of a heated device. However, it requires a small harness addition, a spacer, and a new actuator. It is about a $150 to $200 option.

If I were you, I would buy a new heated actuator. They are available at most auto parts stores, and are about $90. They are also on eBay for about $55 plus shipping. These are very easy to change - just thread out the old one, and thread in a new one.

Good luck, That actuator is usually the problem 90% of time.

There is a swith on the xfer case. Do this...Key on engine off select 4wd. With a 12 volt test light go to the front axle and disconnect 4 way connector and check for power to front axle actuator (About 2 inch in diameter screws into axle on pass side) I believe wire color is brown. If you have power you have a bad acuator (unscrew from axle). If you do not have power you have a bad xfer case sw or blown fuse.

fheck for a blown fuse under the dash in the 4wd slot of blown replace if not make sure you have 12 volts on the fuse and at the acuator with switch on you can take the acuator outto see if it is working.Switch on, enguage T-case this is easer with two people yoou can watch the acuator open and close with the operation of the T-case if it is opeerating correctly and the drive shaft is turning then chances are the problem may likely be in the front diff