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Q: service 4WD light comes on, what is wrong
on 2003 Chevrolet Avalanche 1500

goes out sometimes but comes back on after a few miles in 2WD
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Brfore doing anything that might delete the stored codes, have the transfer case module scanned with a REAL scanner by REAL mechanic!! Too many possibilities for guessing, otherwise will be wrong every time and just waste money on parts not needed!
Try this: disconnect the negative cable from the battery for a few minutes. After you reconnect the battery, go find some loose ground, put your transfer case in 4wd and make the system work. Be sure to use both high and low ranges and shift in and out of 4wd. What you are doing is testing the system to see if there is in fact a problem. If the light comes back, you will probably have to replace the encoder motor on the transfer case but be sure to get that verified by a mechanic.
I disconnected battery, started truck, after a few minutes service 4WD light came on. Next day no light when started, drove few minutes light came on. To replace encoder {control} module do you have to drop transfer case and dis connect axles. 2 different hand held computers showed no codes
Okay, I'm going to guess that you had the vehicle scanned at a parts store or the like. If so, the reason you had no codes is probably due to the type of scanner used. The standard tool used to pull codes for a quick check generally reads only the powertrain control module (pcm). All powertrain codes begin with the letter 'P' for powertrain. The t-case module (tccm) will return codes that begin with the letter 'C' for chassis. You will need to take the vehicle either to a dealer or to a repair facility that has a fully loaded and updated scan tool. With it they should be able to pull codes, perform actuation tests and monitor sensor data. Considering how fast the light comes on, I wouldn't worry too much about having disconnected the battery. I want to be clear, I said it was probably the encoder motor but motor replacement is not always necessary. The electronic part that fails is actually the encoder ring. The ring is a position sensor that tells the module what gear the t-case is in. The sensor is inside the motor so replacement requires removal and disassembly of the motor. I suggested it because it's a fairly common problem on these trucks but you should, by all means, take it to someone who can verify that. To answer your question, the t-case does not have to be removed, only the motor comes off with removal of 3 bolts, one connector, and possibly the propeller shaft. The repair is fairly technical so think about letting an experienced mechanic take it on. Now go get that truck fixed before you really need 4wd!
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