want to double check S10 4 wheel drive indicator light

You are dead on. The "switch" on the front diff is the actuator for the center axle disconnect. Like unlocking the hubs, allows both front wheels to free spin independently.
The older vacuum actuators like you have are especially probelmatic. You can replace with the vacuum model or upgrade to an electic actuator, have to run power to them I believe.
Either way it's a pretty easy job and about a $100part.