Norm - will do what I can!
Interesting ideas - Thanks!
I did resistance test the diff switches and everything worked correctly. I read resistance to ground at the diff connector and it was zero (good). I also read the voltage at the the diff, and when locked, it went to zero (confirming no resistance to ground - also good). Finally, the light does not stop blinking until the diffs physically unlock. The PCM (sorry Norm!) / dash cluster (depending on which document you are looking at) is reacting to the diff switches at least in some ways. I think that is saying the diff switches and the wiring to them is probably OK.
The key switch/lock is an interesting idea that I have not looked at yet. This Jeep did have the mechanical part fail once already. Am assuming this is the part that connects to the rod that goes up the column from the switch block below? In general, the key does not seem to be loose, and I fired up the lockers, hand rotated wheels to be sure there was physical lock and wiggled the key - lights kept blinking.
I do not get a door chime when the door is open, and the key is in. It does not chime until the ignition is switched on with the door open. Should I? That may be a clue...
I will go through the schematics again and see if I can identify the wire you are talking about and jump it out to test the theory. Anything else you know of this signal used for? Everything seems to work that I know of but if there is something else, it might help put the finger on it...
This started as wanting to be sure the lockers were fully engaging, now I am obsessed about the lights. Thanks for keeping the ideas coming!