4WD Electronic Actuator issues

Good day fellow 3rd Gen 4Runner enthusiasts!!

My son has an '01 4Runner SR5 that is suffering from the common issues with the electronic actuator on the transfer case that causes it not to work and the indicator lights on the dash cluster blink all the time. I've read numerous threads on this forum and others from people who have also experienced this problem, but I haven't found anything yet with the instructions for dealing with our situation. We also have Vols 1 and 2 of the factory service manual for this model year. So, here's the issue (sorry for being long winded):

When we purchased the 4Runner, the vacuum line from the upper part of the transfer case was disconnected from the actuator because of cracking on the end. As a result, water got into the actuator and corroded the circular electrical leads on the inside of the actuator. I spent a good amount of time cleaning the corrosion off the connections, and tested the electrical contacts with the pins on the electrical plug. I pulled the gear out of the actuator to check if it was in good working order. I also tested the motor on the actuator to make sure it was functional, which it is. I have tested both the 2H and 4H position sensor switches, and they function correctly (I get continuity when the switches are depressed). Also, in troubleshooting the transfer case I have learned there are three positions of the rod:

All the way back - 2H
Middle position - 4H
All the way forward - 4H with diff locked (based on posts I've read)

The rod does move in all three positions.

Full disclosure, I have not checked the actuator or position sensor on the front diff yet. I'm hoping to try to rule out issues on the transfer case itself before moving forward to the front diff.

Now, the crux of my issue at this time. I believe the actuator and transfer case are functioning fine, but I can't see to find the right position for the gear to set in the actuator when the transfer case shaft is pulled all the way rear. There's a nub on the outer body of the actuator and I believe I read that the three pins on the gear need to line up with this nub (second photo). What I haven't been able to find is if the transfer case should be in 2H, 4H, 4L for the pins to line up. The factory service manual shows which positions on the electrical lead correspond to 2H, 4H, and 4L. The manuals lists as the following (first photo):

2H - Continuity between pins 4 and 5
4H - Continuity between pins 4 and 6
4L - Continuity between pins 3 and 4

It seems no matter what position I place the gear into the Actuator housing, I can't get the continuity tests to match the service manual and be able to move position shaft from 2H to 4H by hand. The only position I place the gear where I have continuity only between pins 4 and 5 (2H) is such that the gear will not rotate at all (see the last photo). When I place the gear into a position where all three positions of the transfer case shaft can be accomplished, the continuity tests fail.

So, all that being said, what am I doing wrong? I can't help but feel I'm really close to fixing this, but I'm missing something about the gear position and the continuity test of the leads. I think the secret is having the shaft in the correct position with the electrical leads pointing to the nub on the actuator housing, but I can't figure it out. Ideally I'd like to try to get this actuator working and not have to replace it, but if that's the answer then I'll pursue it. Any suggestions are greatly appreciated.

Take care,

Jonathan (Mudhen459)