The lines need to be on the fittings to make it come out of 4wd. Now, are you sure the front axle is disengaging? If the vac switch on the T case gets stuck or fails it will constantly supply vacuum to the front axle keeping it engaged, once it is engaged it will stay that way. Easy way to check is jack up the passenger side and try to rotate the wheel, see if the front driveshaft turns. The pop could have been the CAD screwing up, or it could have been in the T case, either would keep the 4wd light on but not make it feel like the truck is still in 4wd.
Another thing to check is the switch itself, it could be stuck, take a meter and see if you have continuity across the two prongs.
hitingon> Sounds like you have a bad switch in the CAD that is making intermittent contact.