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From owner's manual..."To prevent damage, the electronic shift 4WD system is designed
to allow up to 45 seconds before the shift command is performed."
Make sure you wait long enough. You also may have to move the vehicle before it will actually engage.
If it still won't work...there are 2 fuses which are related to the ESOF. Under dash #28, under hood #17. Check these first. If they are good, turn your key on, but don't start the engine. Wait a few seconds for the fuel pump and vacuum pump to kick off. Then turn the switch from 2 wheel to 4 high. You should hear the shift motor in the transfer case click as it engages. If not, your dash switch or the shift motor may be bad. Find a dirt patch and turn your wheel full lock, and drive ahead slowly. If the truck shimmies from side to side as you are turning, you ARE in 4 wheel, and the indicator switch in the transfer case is no good. You must be STOPPED, have foot on brake, AND for auto trans be in neutral, for manual trans hold clutch in for it to shift into 4 low
1996 F250, 7.3L, auto trans, 4x4, eclb, TS Performance 6 position chip