Since purchasing my 2001 Montero Limited in January I have had all 5 transfer case switches replaced, freewheel clutch valve & freewheel clutch switch replaced, transfer case & front/rear differential fluids changed and greased the front actuator rod. I still get the C/D light flashing periodically without using the 4x4 system. It will go out after turning the vehicle off and restarting, but it is annoying. The dealership has said everything is good and it just needs "exercised" How much "exercise" till the C/D light stops coming on? Is going from 2H to 4H adequate or do I need to go down to 4HLc and 4LLc? Is there any thing else I should check and/or replace? Just getting a bit frustrated with this

 

Did you check the switch? Remember, I had the 06 with the dirty selector switch. It may be worth a look if you haven't tried it already, and it's free.