Maybe you already know all this, but a couple different things happen when you shift your tcase lever to 4wd. First, the collar in the transfer case physically engages the gears running to the front driveshaft. That's why you can't spin that DS when you've selected 4wd - it's tied to the drivetrain. So that part is good. The other thing that happens is the ADD setup uses vacuum to actuate a slide collar on the long-side half-shaft, which lets the front diff put power to both front wheels. If you'd like to test whether that's working or not, jack the front of the truck in the air and put it in 4wd, then try to spin each tire. If the drivers side tire spins freely and nothing else happens, that actuator isn't engaging. If the passenger side tire spins in the opposite direction that you spin the drivers side tire, then it's working. As far as vacuum goes, I'm not up to speed because I've never had an ADD truck, but I believe you should have vacuum on one side in 2wd and vacuum on the other in 4wd - if that's not switching when you engage the tcase lever, maybe you found your trouble?

The 4wd light in the cluster could be a burned out bulb, or a bad sender, or a sign that the front actuator isn't working. Check the 4wd itself, then you'll know if you're chasing an indicator issue or a 4wd issue.

You should find a link to download FSMs in the stickies at the top of this forum. Been a while since I've looked at that site, but I think there's a T100 manual there. If not, your front suspension/4wd components are very similar to the second gen 4Runner, and your 3.4 drivetrain is the same as the third gen.