On a 1995 isuzu rodeo there is a 2 pole switch mounted on the right side towards the top of the transfer case.
It is used to indicate (light up) the 4wd indication light on the instrument panel.

My question is this: Should it be either a nc (normally closed) switch or a no (normally open) switch?

It should be a normally closed (plunger extended, switch contacts closed)type switch since the actuating linkage in the transfer case is high only in 2wd mode (switch plunger actuated/ pushed in, switch contacts open)and low in 4wd mode?