2000 Mitsubishi Pajero 4WD indicator light is flashing and it will not change gear

From memory, the centre orange light on this vehicle indicates whether the locking centre differential is engaged or not. When the light is on, the diff in engaged. When it’s flashing, it’s in the process of engaging electronically. For this process to occur, the main transmission needs to be in neutral, so trying to get the vehicle to move and change gears while the diff is somewhere between engaged or disengaged, might be the problem.

I’ve also heard of problems with the sensor that detects whether the centre diff is engaged or not on this make and model. Sometimes the sensor can die, other times it’s just a wire that has fallen off, but it could mean that the vehicle is confused about what to do and the transmission is stranded in neutral as result.

Try rolling the car forward a few metres (if possible and safe) to see if that small amount of movement allows the diff to engage and normal operation to be restored.