Yeah the early Manual, dual range 4wd cars (ea81 cars, 80-84) had the 4wd lever pivot point mounted solid to the body. When the trans mounts get bad, and the trans moves around it chnages the relative location to the lever.........causing it to try to engage 4wd.
Later models (85-89) with Dual range have the 4wd shifter mounted to the shifter stay, and isolated by a rubber bushing....so the trans can move around, and the lever stays relative with it.
The 4wd light and the lever jumping around is definately your trans mounts.