2001 Prado - Centre Diff Lock Problem

Hi all,
I am hoping that someone here can shed some light on a problem I am having with my 2001 Prado(5 speed manual). Approximately 1 year ago, I cooked the oil in the centre diff whilst towing my boat. I had left the caravan park and about 10km down the road, I could smell this awful stench, which turned out to be the oil cooking in my centre diff. Stupid me left the stick in HL and hadn’t realized. I have no idea why I didn’t see that big orange light on the dash that tells you the centre diff lock is engaged. I took the car to my mechanic the next day and he changed the oil in the centre diff, he told me at the time that he did not detect any metal in the oil. A few months ago, I started to have trouble with my centre diff lock. When I shift between LL/ HL and H, the diff lock light on the dashboard would not extinguish. I would have to have to reverse the car down the road for a bit in order for the light to extinguish. I select low range when pulling my boat up the ramp, which is approx 60 meters total distance.

In recent weeks, things have now deteriorated to the stage where the only way I can get the light to extinguish is to jack up the front wheel and let it unwind. As soon as I jack up the front wheel, the light immediately extinguishes. Today I took the car down to a huge gravel car park and selected HL, as soon as I selected HL, I could here a meshing type noise coming from the front end. I immediately stopped and changed back to normal mode (H). No matter what I did, the diff lock light on the dash would not extinguish. I crawled home(which is 1km from the car park) and jacked up the front end and the wheel unwound and the light went out.
Do you think my centre diff lock is cactus ???

Regards
Jason