Ok, I’m back for an update and final resolution. (New cdi fixed the issue)
First, if you have this issue or error code 11, download the service manual... it helps imensely.
Here is the one for 01-04 Rubicon.
The first thing I noticed with mine was that after pulling off the shift control motor, the reduction gear was completely locked clockwise. Using a screw driver to pry with reasonable force did not work and I did not want to break it so after pulling off the shift position sensor, I was able to wiggle the shaft under it while also lightly prying on the gear to get it free.
Using the service manual as a guide, the wiring harness checked out and also the motor and shift sensor were within factory spec for resistance.
Something I noticed was that when attempting to initialize, I got almost no power to the shift motor connector, which told me either the computer detected no motor was connected (and sent no power) or the computer just wasn’t sending the power because it was toast.
I went ahead and bought a new shift sensor and motor from amazon, they were the cheap ones... $12 for the sensor and $46 for the motor. They both tested out the same as the original ones on the bike (within a few ohms) and also did not fix the problem. [more on these parts later]
After some discussion with some members here on the forum I decided not to buy a used CDI but instead purchased a new one on EBay. Cost was $207 which was a little unnerving because my local shop wanted $343 cash and carry.
CDI came in, pulled main fuse, installed CDI, installed main fuse, initialized and for the first time I can hear it shifting and no more blinking shift indicator. Problem solved. Bike drives great. Also, take note, the easiest way to remove the cdi is to drop the rear cargo box.
To make sure there was not multiple problems I reinstalled the original shift motor and sensor and they also work. I’m going to keep my new parts as backup but could also likely return them to amazon... this is half the reason I used amazon and the cheapest option. Since these items are far cheaper than OEM they likely have questionable build quality and may not last very long... but, they can get you back on the road.