My 2003 4runner (v8 4wd Sport Edition) with 150,000 miles is stuck in 4 wheel drive.

Normally when I press the center differential lock button to place the vehicle in 4wd, the yellow center differential lock light blinks for a few seconds and then stays lit (without blinking) while the center differential is locked and I cruise in 4wd.

The same thing happens when I switch out of 4wd: I press the center differential lock button, the yellow center differential lock light blinks for a few seconds and then turns off when the differential unlocks and I cruise in 2wd.

On Saturday I pressed the center differential lock button to place the vehicle in 4wd and cruise on a dirt road. The differential locked and the vehicle was in 4wd, but the yellow light never stopped blinking. It's still blinking and I'm still in 4wd, despite repeatedly pressing the lock button, accelerating, reversing, etc.

Toyota service center is quoting me $3,300 ($1,300 parts + $2,000 labor, assuming 12 hours of labor) to replace the transfer case actuator. But I wonder if the problem is electrical (maybe the blinking light means the vehicle is electronically confused about whether it's in 4wd, and so isn't prompting the differential to unlock).

Is the Toyota quote reasonable? Is this possibly an electrical problem? Other thoughts? This is the moment of truth for this 4runner, and it's been so good to me.