Sorted this at the weekend.
Unscrewed the actuator and found someone had jammed a piece of 1" wood between it and the plunger in the axle. Also traced the wiring back and found the brown cable in the conversion harness had been connected straight back to the battery. So I think someone had unplugged it due to it draining the battery?
I sorted the wiring and connected it back to the brown wire on the transfer case connector. Removed the wood and checked the depth of the plunger in the axle, seemed like the spacer was already in there although I couldn't get it out.
Left the actuator out of the axle and shifted between 2hi and 4hi a few times and it worked perfectly OK. Screwed it back into the axle and tested and I now seem to have fully functional 4wd!