4x4 diff lock flashing/flickering orange

You're going to need to be very methodical in dealing with this.

When describing the symptoms, like which lights are on, you'll need to be very methodical, as an example...

When in 2h the back wheels dont light green but in 4h the front wheels do and when in 4hlc is stays orange.

This line suggests the front wheel lights stay orange, which, if I recall correctly, cannot happen.

Let me say up front, that I no longer have my iO, so I'm going from memory and I no longer have the option of going outside to see what is actually on the car.

Rear wheel green lights not lighting will I believe most likely be a blown bulb, but, if I recall correctly, there is a switch on the transfer case that can cause them not to light, and of course wiring problems will be a possibility, but check for a blown bulb as the first step.

The 4WD light display is mostly bling, but it does let you know when things aren't working correctly - there will always be drive to the rear wheels, even if the rear wheel lights are not on.

There are five switches on the transfer case and a sixth one on the front axle, four of the switches on the transfer case and the one on the front axle are inputs to the 4WD light display controller which is mounted under the carpet just in front of the driver's seat (on a RHD car).  The fifth switch on the transfer case controls two VSVs (Vacuum Switching Valves) mounted on the right side of the engine bay (look under the intake manifold) - these are the "solenoids" you've been told can cause problems.

When the transfer case is in 2H this switch closes and sends 12V power to the VSVs which control the vacuum going to the front free wheel actuator on the front axle - disengaging it so that the front axle cannot send engine power to the front wheels.  If you get the front wheel lights to come on when in 4WD (anything other than 2H), and no NOT flash, then you do not  have a problem with this mechanism.

The switches on the transfer case essentially tell the light controller which position the selector lever is in and which position the mechanism is actually in and if the two don't agree you get a warning in the form of a flashing light.

For example, when you select a 4WD position two switches detect this, one controls the front axle and the other tells the light controller you have selected 4WD - the switch on the front axle tells the light controller if the front axle is engaged or not, if both switches say 4WD is engaged the front wheel lights come on, if either switch says "not in 4WD" than the front wheel lights will flash to let you know.

If the selector says 2WD and the front axle says 2WD the front wheel lights are OFF

If the selector says 4WD and the front axle says 4WD the front wheel lights are ON

If the selector says 2WD and the front axle says 4WD the front wheel lights will FLASH

If the selector says 4WD and the front axle says 2WD the front wheel lights will FLASH

The last two conditions listed can be caused by defective switches, wiring, VSVs, vacuum lines or problems in the system.

The other switches on the transfer case operate in a similar fashion for the VCU (Viscous Coupling Unit - the car doesn't have an actual center differential, it uses a viscous coupling which can be locked) - if the selector says locked and the coupling isn't locked the center lock light flashes, if the selector says unlocked and the coupling is locked, the center lock light flashes.

The light flickering suggests that there is a problem with the detection switch.

Go down into the resource section of the forum, look for the workshop manuals & download them - the details on which switch does what and how to test them is in the automatic transmission section of the Pinin manual