When I put it in four wheel drive the drive shaft turns and the hubs don't lock in. The indicator comes on and nothing happens. Any ideas?

 

My 04' had the same problem. The IWE's are bad. I guess it is a know problem. When I brought mine in they switched them out with an updated part. If you do a search you will see a lot of threads on this topic.

 

when the IWE goes bad...or the vacuum pump fails

the front hubs fail engaged. so if it was an IWE problem, you would be in 4x4

check your fuses. I'm betting the relay that tells the IWE to break vacuum isn't working. You can also try taking the vacuum lines loose at the IWE themselves. if the hubs engage and 4x4 works, you know it's an electrical issue somewhere...most likely at the t-case

 

I wonder if the 09s will be any better!!!

 

doubt it...system works pretty good with just a few hiccups here/there

remember those auto 4x4 hubs that were used from 92-96 F/E series? they had some issues also, but worked 99% of the time like our IWE do