There are a couple of TSBs on this as follows:
Service 4WD Indicator Illuminated, DTC B2725 Set, Transfer Case Selector Switch is in One Position - Indicator Lamp Indicates Another Range Is Selected (Replace Transfer Case Shift Control Switch) #02-04-21-002A - (02/11/2003)
Part Number 15194913
Switch, Transfer Case Shift Control
Inoperative 4WD/AWD Lamps, Inoperative 4WD/AWD System (Reprogram Transfer Case Control Module) #02-04-21-006B - (08/18/2003)
with Electronic Shift or Active Transfer Case (RPO NP1, NP4 or NP8)
Remove the underhood (ATCM or TREC) TCCM fuse.
Wait 30 seconds.
Reinstall the fuse. The module should "wake up" and communicate with the Tech 2®.
Check for codes in the TCCM. If a C0550 is found, replace the module and go to the next step.
Reprogram the TCCM using normal procedures...
Try removing the fuse as per the 2nd TSB to see if that helps. The 2nd TSB includes all 2002-03 GM T360/370s (TB, Envoy, Bravada) full-size pickups, and the Tahoe/Suburban too. Bascially anything w/ an electronic t-case.