That, I think is the "outside" air temp sensor, and as I mentioned earlier, third gens don't have the differential air pump, the front diff on those is always "engaged" because they are full time four wheel drive.
I had a quick look at a parts catalogue, that IS the outside temperature sensor and it appears to fit somewhere behind the lower grille - my third gen is at back of the yard and today being Saturday, I'd have to move two vehicles just to get to it, remind me on Monday and I'll see if I can find out exactly where it goes.
Back to the 4L light flashing & beeping - where is the selector knob now? If it's in 4H, STOP driving the vehicle until you can get it sorted.
Essentially you get the beeping and flashing lights when the knob position doesn't match the actual transfer case selection, so if the knob is in anything other than 4L and you're getting the 4L light and a beeping, it means the transfer case could be in 4L and you don't want to be driving on a hard surface in 4L.
Let me clarify that a little, the selector knob has four positions, 4H, 4HL, 4LL and N - the only one that should be used whilst driving on a hard surface is 4H. The 4HL & 4LL positions lock the center differential and driving on a hard surface with the center differential locked can cause transfer case damage.
If the knob is in 4L and the lights flashing, turn the knob back to 4H and see if the flashing/beeping stops, if it does, you'll probably be fine - there's a specific sequence of shift lever, brake pedal & selector knob operation to actually get the transfer case to shift into 4LL, so if someone were, just as an example, fiddling with the knob with engine off, and you then started the car, it shouldn't actually engage 4LL, but it should warn you that the knob position doesn't match the case position.