I have a '00, and from what i've seen on here and the toyota mechanic i've talked to, basically the shift fork inside the shift module sticks. It doesn't feel like its engaged when you're turning because its not, rather its stuck in between 2wd and 4wd. Make sure you don't drive over 60mph while its flashing. mine sometimes stops flashing almost right away and sometimes it takes longer, sometimes at lower speeds and sometimes i have to hit 50-60 mph to get it to stop. Even if it stops flashing while im driving it sometimes starts flashing again next time i drive it. You can try tapping on the module (black box on the t-case) I've heard that sometimes works. the toyota mechanic told me it costs like 3 grand to fix at the dealer. I believe they replace the whole module. Since mine will still disengage I was told its best to keep using it regularly to "exercise" it or it will stop working all together. Bottom line though is since you have the warranty, if I were you I'd get it fixed. If you get it fixed you should use it at least 10 miles per month according to the owners manual to keep it working properly.