transfer case switch acting weird?

First off I have a 99 Blazer 4x4 4door with the 4.3 Vortec it has a little over 155,000 miles on the original drivetrain I bought it used with like 100,00 miles on it. The only modification done is to the exhaust which is bone stock except for the flowmaster exhaust which for now I kept the stock pipe size. The truck runs good except for about 2 months ago I noticed one day after driving in the rain the 4x4 2 Hi light went out I pulled over as soon as I could and hit the 2 Hi button it came back on and I didn't seem to have a problem with it them 2 weeks ago it rained then it instantly got worse I had been driving in the rain for about 2 hours and I stopped when I came about 10 minutes later and started it and drove down the road the2 Hi light went out I push it because I was only going about 10 mph, it came back on then about 2 miles down the road it went out then started blinking then went out again. I stopped at a local GM dealership the guy acted like I was crazy and said it can't do that.  So I crawled underneath and taped up the wires going to the transfercase and seal with weather sealant the plug going in with no luck. I am currently a stundent and cannot really afford a major repair. I am fairly experienced at working on vehicles and  enjoy 4 wheeling, but I am kinda stumped any help or direction would be appreciated. Also what would be some bang for the buck begining mods. I wish to keep the 4.3 I believe it is a strong motor it just needs a little more. Also what about lifts what would be good that doesn't require massive mods. Sorry this is so long. Thanks again I will also lend assistants to questions I can help with.  

Ok, thanks again Dave. I went out turned the key to the on position the 2 hi light came on just like it should so I turned the key off and used a screwdriver to pop the switch out and when I pulled the switch out (which I was very careful, just barely pulled it out) I turned the key back on and the lights were out. I put it back in the dash but didn't lock it in then the light came back on but when the switch is moved the light goes out I checked the wires which look brand new. I am going in just a little bit to try to find a new switch at salvage yard I think any 98 to 05 switch will do. If it doesn't work how hard is pulling the dash apart to replace that section of wiring harness and does it just go to the transfer case control module behind the glove box. 

Now I'm mad I just went out to look at the switch and it appears to not be the switch I think it is the wires. I noticed when you touch the wires specifically the ones coming off of the top plug the light flickers and goes out or comes back depending on if it is lit or not. I volt tested the wires and cannot find a drop in current ?

It is possible it is not the wires themselves, but the solder joints in the switch assembly (if there are solder joints).  Is it possible to pop the assembly apart and have a look at the insides?  It may be something as simple as resoldering some joints.

Thanks Kyle, you that was it. I finally got around to it as both of my feet are broken and I am a little slow right now, but still 4 wheeling. Gotta love that. I also found a problem with the wiring so I am going to cut out the bad and replace it. Anyway thanks again.

Great!  Always glad to help out!  Makes it all worth it when we help someone save some cash!!!  Glad you got it fixed up and are back out 4 wheelin'!  Get those feet healed back up!