The 4WD module(TCCM) sends voltage to the 4WD switch when key is on.
In the 4WD switch are 3 resistors, one for each setting, OFF, 4hi, 4Low.
The voltage the 4WD module gets back from the switch, after it passes thru the 1 resistor, tells it what the switch position is.
This is similar to cruise control controls, each button uses a different resistor so cruise control "brain" can tell what button was pushed by the voltage change.
Google: 2003 Ranger Transfer Case Control Module
If the 4hi actually changes back to 2WD then problem could be in the switch or the 4WD module, misreading voltage from 4WD switch.
If the light goes out then motor has to be moving to disconnect it.
The 4WD lights are simple contacts in the motor housing, when motor moves the 4 contact "switches" located on a wheel in the motor housing open and close, this tells the 4WD module when the motor is in position for 2WD, 4hi, 4low, and these contacts also power the 4WD dash lights.
Flashing light means motor didn't respond to 4WD module, or didn't move far enough, which is often just a fuse issue.
Here is diagram for '01 Ranger 4WD system, its the same as '03, fuse #'s may be different, but I don't think that is your issue.
Last edited by RonD; 08-14-2016 at 11:12 AM.