The FWD light usually uses a switch on your transfer case to ground the circuit. Sounds like you have a short to ground in your wire or a bad switch.

If the light remains on after you disconnect the wire from the switch, it is a short. The wire is grounding somewhrere, completing the circuit.

If the light goes off when you disconnect it, it is probably the switch or the ball in the TC that pushes onto and activates the grounding switch.

JAF