KZ78 4wd questions

[graysworld]

I am new to Toyota 4wd systems and this is the first automatic I have driven so have a few questions. The 4wd indicator lamp flashes when I either engage the 4wd switch to the right of the steering wheel or the low ratio gearstick. I have been told the light should stay on which is logical. Today with a mate we got all 4 wheels off the ground. The 4wd is working and the hubs are stuck in the on position with no indicator lamp coming on. 4wd still flashing! It is only possible to engage 4wd when main box is in neutral. Is this normal?

Regards Graeme