Problem partially solved (sort of...)
Good news and bad news... I have confirmed that the reason the transfer case was not shifting into 4low was because the N on the PRND123 would not light. After shaking wires and establishing some kind of connection, N lit up, so I managed to solve my original problem and the problem which is the subject of this post. I shifted into neutral, pressed 4low button, the lights flashed, I felt and heard a slight yet distinctive clunk sound. I pressed on the gas and could feel a distinctive difference in the way the truck felt after a foot or so (a little tighter?) so I thought I was good to go, and that it was in 4 low, but after about 4 or 5 feet, I heard a very loud clunking/grinding like the gears were bouncing around and not fully engaged. I immediately put it back into neutral, it made the grind/clunking noise again for a second but stopped when i got out of drive, and I was fortunately able to switch it back to 2 hi, and the truck drives...
I don't have any experience with 4wd except for what I had just done last night, so I may just be tripping on some normal 4wd noise, but I'm not convinced because it sounds really bad. From what I can tell, it may be the front differential, a wheel bearing?, or something in the transfer case. Not really sure where to go from here except for replacing fluid in the front differential. I already replaced the fluid in the transfer case a few months back with the blue stuff...