If you have never used the diff lock, you must be in low range, and you may have to drive it extensively in low with the diff lock button engaged (and the light blinking) until the locking mechanism frees up. My '98 required a week of driving on my short dirt road with the switch engaged (short daily trips) until the diff lock finally freed up and engaged. Don't run to the dealer to get it fixed until you drive it some 'blinking' and see if it will free up on its own. If you don't live near a dirt road, find one, engage the lock and drive around and see if it will free up. Then, engage the diff lock once/month to keep it moving and working. Doing the gray-wire mod (note: the wire isn't gray on 4Runners - it's green/blue, I think) will mean you can do all this debug work in 2WD high range, which is easier.