OK so you have changed the Actuator Pin assembly.
The RED LED is your issue.
This is the SKEES warning light.
Normally the chip inside your ignition key sends its unique code to the SKIM module at the top of the steering column which has a wire loop around the key entry.
The SKIM module sends this code to the PCM. if it is happy with the keys code.
If the PCM is happy with the code received it energizes the ASD Relay and some other items on the 3.7 gasser.
If the PCM is not happy with the code received....it flashes that RED LED. Normally the Jeep will start and run for a few seconds then cut out.
If the PCM is happy with the code received the PCM activates the ASD Relay etc. and if the PCM then is not happy that the ASD relay has in fact energized then the RED LED stays ON fulltime.
The Jeep will turn over but not fire.
I had this exact problem on my 2002 Export Diesel...the early KJs used a yellow "KEY" icon instead of a RED LED.
My Key Icon stayed ON all the time....this was caused by one of the wires energizing the ASD Relay Coil had broken so the ECM (PCM) did not get the signal back from the ASD Relay.
Until I fixed the wire I was able to override the problem by removing the ASD relay and jumpering female pins 30 and 87 together inside the empty socket.
The Gassers also make use of the ASD relay so check if this is energizing and swap it over with an identical one nearby.
You may be able to override your problem by removing the ASD Relay and jumper pins 30 and 87 together...may work.
However the Gassers use a few extra tricks other than the ASD relay to disable starting due to a SKIS problem....I will need to read up a bit to get more info....disabling Starter Relay may be one of those other tricks
Download the 2005 Jeep KJ Service Manual here...has a section describing how SKIS works and Section 8W has the Wiring Diagrams!
www.colorado4wheel.com/manuals/Jeep/KJ/