As far as your actual problem goes, there are a few causes:
1. The primary failure is the transfer case shift position sensor. It's easy enough to access without removing the t-case from the truck. The original sensors have a tendency to fail on the outer reaches of the rotation range (aka 4 low).
2. There is updated software for the transfer case control module which has the t-case shift motor stop a couple counts short of the original end ranges of travel. If the shift motor goes too far, the TCCM loses track of where the shift motor is and will set the service 4wd light and stop in place. If you have this issue, remove the shift motor and shift the t-case into 2wd manually with a screw driver. When you start the truck again, the sensor and motor will be back into sensing range and will work again.
3. Less common, but still an issue is the push button module failing in the dash. I've seen this a couple times though.
I've changed the position sensor on my father's 03 Duramax and on my older 03 Tahoe. I've updated both TCCMs with the new calibration with my Tech 2 and never had another issue with either again. Both of them got stuck in 4lo like your's did.
