Does that year T100 have the same front end as the 95 and older pickups or the 95.5 and newer Tacos? Either way, I believe you have ADD in the front. Assuming ADD.
Re the light - there's a switch on the transfer case and a switch on the front axle ADD mechanism. When both the tcase and the ADD are engaged for 4wd, those two switches are closed and the power goes to the light on the dash. The power also goes to the ADD solenoids to switch the vacuum to the ADD mechanism on the front axle. I would troubleshoot the light first. Find the switches, check the plugs. Get a test light and check that they work. That might solve it. If not, it will probably lead you to looking at the ADD system.
In 2wd you should be able to turn the front driveshaft by hand.
If the transfer case does shift into 4wd, the front driveshaft would not turn by hand no matter what.
If the ADD operates properly, then if you jack up one front wheel and rotate it, it won't turn. If the ADD didn't operate, one front wheel will turn freely.
The ADD having worked, now the light should come on.
If the ADD doesn't work, that's another troubleshooting issue. First check the vacuum lines at the axle mechanism, then under the hood at the solenoids. Next would be electrical checking of the solenoids.