Followup and the answer to my own question for anyone who might be interested:
First of all the answer to not being able to spin the rear driveshaft is actually a bit embarrassing - I had the darn transmission pinned in PARK. I guess I had my head so wrapped up in this center diff lock thing that I lost track of the basics.
Anyway this whole fiasco did lead me to do a good amount of research and I found that there is a lot of stuff about this on the internet including many YouTube videos from Ashcroft up to and including transfer box rebuild. I also found a complete LT230 overhaul manual at
landroverresource.com in which there are many detailed exploded views of the diff lock mechanism.
Of course, as is normally true of the internet, there is some stuff out there that is just plain wrong. For one thing there is no "neutral" for the diff lock. There are only two detents in the shaft and turning the spigot clockwise from the unlocked detent moves it to the locked detent while turning it counter-clockwise from the center position does not accomplish anything.
Finally, an easy way to test your center diff lock is to chock the vehicle in neutral with parking brake released and jack one wheel (any one, doesn't matter) off the ground. With center diff unlocked you can turn it, with center diff locked you can't. The engagement is a dog clutch and it is spring loaded both ways on the shaft so when you move the lever the light may not come on if the alignment is not right but turning the wheel any amount and it will pop in. This explains why the light may or may not come on or go off immediately when you move the lever. I performed this test and mine is working exactly as it is supposed to.
Again thanks to everyone for the help, tips, links and advice I hope this helps someone else at some point in the future.