Like I said, it could be either a failed actuator and/or a failed switch. Unfortunately some of the limit switches are not in fact servicable and thus may require replacement of an entire actuator (I believe this is the case with the transfers case actuator, I can't remember because some of the newer ones like the New Tacomas have replacable switches.)

Here's a "Quick Training Guide" from TIS on the '03-'09 T4R 1GR-FE 4WD system and what testing would look like:
T-QTG-312F-D.pdf

So if you did manage to do an actuator test of the system, your screen should have shown a data list of the following switches with on/off indications when you tested the actuator:

~TL1
~TL2
~TL3
~DL1
~DL2
~ADD

The system uses a combination of On/Off switches to know what position it is in currently, what position it wants, and if it in fact shifted into that position. A failure of any one or more switches can cause the ADD or Transfer Case Actuator to not even engage.