same problem here, will try adjusting latch

 

Here's a diagram of the '99 liftgate switch. The '98 diagram doesn't show the switch function like the '99.


Note that the switch is looking for a ground circuit for the cargo bay dome lamp and the liftgate ajar light.

 

I have a 98 XJ that just started doing this. I took apart the back hatch molding, and worked my way to the latch. Not terrible to access. Don't forget the handle on the interior of the back hatch has two screws hidden under some decorative covers, and that there are a handful of clips that just get pulled out after all the screws are removed in order to pop off the whole molding section. The latch assembly is held in place by (3) torx screws and a pin that helps with the open/close/locking mechanism. The electrical connector in question is also right there. I'd have taken pictures, but it was like 20 degrees outside, and my finger tips were numb.

Anyways, you pop off the electrical connector to the switch that's causing the issue, unscrew the (3) torx screws, and just pull the small rod out of its clip. The latch assembly comes out easily. I examined the wiring and the connector, and they looked great. I turned my attention to the switch mechanism.

There's another small torx screw that holds the switch to the latch assembly. It comes out pretty easily, and then you can marvel at the simplicity of this particular switch. There's a spring-loaded Teflon type piston that gets moved by the plate that opens/closes the latch. When the latch is "open", the plate is in contact with the piston, causing the spring loaded piston into its sheathing, making a connection between the other end of the piston and the electrical circuitry. When the latch is "closed", the plate moves away from the piston, allowing the spring to force the piston out of its sheathing, causing the connection to the other end of the piston and the circuitry to be lost. It's so simple. Everything looked fine. I couldn't see how the switch itself was bad - the spring mechanism worked fine in my hand.

It made sense that the dimly lit light in the cabin might come from the piston not being fully actuated, causing a partial connection to be occurring constantly, making the light stay on. I put it all back together tightly, with the molding still off, and turned the vehicle on. I simulated the hatch being closed by pushing the latching mechanism with my screwdriver, and the light went off completely. I opened the mechanism by pulling the latch, and the light shone brightly. It worked. I put humpty dumpty back together, and all is right with the world.

So, after seeing how it all works, here's what I think happened. I noticed that (2) of the three torx screws that held the mechanism to the door were loose during disassembly. It's reasonable to think that caused the latching mechanism to flex within its own housing enough to make a 1/32" difference or so in the movement of the switch's piston, so tightening it all up might have been enough. Otherwise, just taking it apart and working the piston back and forth through a few decades of grease goop and other crap might have been enough to get it moving back and forth fully, allowing it to fully activate/deactivate that switch.

Again, sorry for no pics. I hope this helps.

 

I developed the same problem as well. Funny thing is when I examined the hatch, the rubber bump stops were rotted out and they were degraded such that they were keeping the hatch from completely closing. I know it seems too simple, but as soon as I replaced both hatch bump stops and closed the hatch, my light went out. Just something to consider.

 

It looks like the liftgate switch has 2 contacts...one turns on the ovhd light/ the other contact turns on the instrument cluster hatch light. On my 01 I could not get one to go on without the other no matter how slightly i opened the latch It could be the switch assy is bad or the wire going to the cluster is shorted to metal. The wire harness throught the boot at the top of the liftgate is a weak point for broken wires