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To make the lights stop blinking and actually engage the transfer case you have to maintain the electric motor that engauges the transfer case. the contact points inside get worn and corroded and wont allow enough power through to rotate the servo. The motor is located on the transfer case and is held of by 3 bolts, remove and unplug. Any good 4-wheel drive shop can fix it for you for about $50 or you can take it apart and clean the contact points inside and relubricate it yourself in about 15 minutes. reinstall and your 4 wheel drive will stop flashing and actually work.
If the 4WD lights are blinking in a sequence, count the # of blinks between pauses. This is a message of the problem. On my 97 Ford Explorer, 5 blinks indicated a problem with the 4WD module. I replaced it myself and cured the problem.
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