ABS and Brake Lights are on

That vehicle uses the two front sensors and the vehicle speed sensor (on the transmission or transfer case as applicable) to control the ABS system.

The parking brake shoe probably is not the reason for the brake light. Normally the brake light comes on with the ABS light to tell you that there is something wrong in the system and your brakes are "faulty". I would get the system scanned to see what code(s) are stored for the ABS. The GM ABS units in those years are known for faulty control modules and broken wires. The codes will give you a direction to start from.

That code is EVIL. But you might be able to take care of it easily. There is a TSB on it because of a faulty ground. And you are correct on location. The parts they use are GM 11588337 (M6 sized bolt w/washer head),
GM 11610367 (M6 Serrated Star Washer),
GM 11503749 (M6 nut)
But you can use common cadmium plated parts. Just be sure everything is bare metal when you assemble them. I don't use the rubber undercoat, it likes to trap moisture under it. Instead I use a wax based undercoat like waxoyl. It flows into the connection and seals the water out.

Bulletin No: 04-05-25-002E

ABS Light On, DTCs C0265, C0201, U1041 Set and/or Loss of Communication with Brake Module (Reground EBCM Ground)

Some customers may comment that the ABS light is on. Upon further inspection, DTCs C0265 and C0201 may be set in the brake module. It is also possible for DTC U1041 to set in other modules. There may also be a loss of communication with the brake module.

Important:
Do not replace the brake module to correct this condition. Perform the following repair before further diagnosis of the EBCM.

1. Remove the EBCM Ground. The EBCM Ground is located on the frame beneath the driver's side door. If multiple grounds are found in this location, the EBCM ground can be identified as the heavy (12-gauge) wire.

2. If the original fastener has a welded on nut, remove the nut from the frame, and if required, enlarge the bolt hole to accommodate the new bolt and nut.

3. Clean the area, front and back, using a tool such as a *3M(TM) Scotch-Brite Roloc disc or equivalent.

4. Install the ground, then the washer and then the bolt to the frame.

5. Install a washer and nut to the back side of the frame.

Tighten the nut to 9 Nm (79 lb in).

6. Cover the front and back side of the repair area using Rubberized Undercoating.

An additional check can be made to ensure a good connection for the battery cable to frame ground. It is possible for this ground to cause similar symptoms with the ABS as described above.

The ground is a ways back on the frame up toward the top flange if I recall. If it's got a good ground it is likely that the module is bad, there are a couple of items that can fail inside and cause problems. I don't bother repairing them normally but I guess you could.
I think you have hit all the "normal" issues. Good luck if you opt for the repair. Post pictures if you can.

STOP! I was following this to learn the solution, but I have two comments. Where did you use penetrating oil? There must never be any hint of petroleum product anywhere that can contact the brake fluid. This also includes engine oil, transmission fluid, power steering fluid, and axle grease. Petroleum will contaminate the brake fluid, and that will destroy ALL of the rubber parts that contact the fluid. The only proper solution for that is to remove all the parts containing rubber seals, o-rings, and other parts, flush and dry the steel lines, then install all new rubber parts. That includes calipers, wheel cylinders, rubber flex hoses, the ABS controller, master cylinder and bladder seal, and the combination valve and / or height-sensing proportioning valve if used. The petroleum product causes the rubber parts to swell, then fail. If any rubber part is not replaced, the contamination will leach out of it and recontaminate the new fluid and parts. This is a very expensive repair.

The point that was overlooked is the red "Brake" warning light. The yellow "ABS" light turns on for a problem in that system. An ABS problem does not turn on the red light. The opposite is true for the red light. That turns on for one of three causes in the base brake system. When it is on, that is an input to the ABS Computer, which then also turns the yellow light on, and the computer turns the ABS system off. The computer sees there is a problem in the base brake system. It doesn't know why the red light is on. It just knows there is a problem that could potentially prevent it from working properly to prevent skidding.

While there could still be an ABS system problem, you should be looking at the red warning light first. Look for low brake fluid level in the reservoir, the parking brake pedal is not fully released, or there is a leak in part of the hydraulic system, and unequal pressures to the two halves of the system. I'm not sure how that is addressed on vehicles with anti-lock brakes, but on other vehicles, there is a combination valve right under the master cylinder. There's a single-wire connector to unplug. If the red light goes off, that switch has been tripped.

Dandy. In my experience, the red "Brake" warning light turns on for a problem in the base brake system. That can be due to the parking brake is not fully released, the brake fluid level is low in the reservoir, or the pressure-differential switch is tripped in the combination valve. That valve trips when equal pressures can't build up in both halves of the system due to a leak. This applies to every car and light truck.

The yellow "ABS" light turns on when a problem is detected in the ABS system. The computer sees when the red warning light is on, but it doesn't know why it's on. It only knows the cause could affect its ability to perform its job properly. That causes it to turn itself off, and turn on the yellow light. Therefore, a problem in the base brake system turns on the red light, and that makes the ABS Computer turn on the yellow light. A problem in the ABS system turns on the yellow light, but there is no problem in the base brake system, so the red light doesn't turn on.

The photos you included, (thank you), show the valves that control the flow of brake fluid during a skid. There is no brake fluid on that side, but still, do not use any type of oil there. That oil can reach the side of the rubber lip seals opposite of where the brake fluid is. The problem isn't the oil getting into the brake fluid. The problem is the rubber is not compatible with petroleum-based products. Brake fluid is a glycol product. The rubber will become soft and mushy, and will grow bigger. That will impede the movement of the valves at first, and eventually the seals will start to leak.

Those valves move first to block fluid flow to a wheel that is slowing down more than the others when the brakes are applied. If the wheel speed doesn't pick back up, another valve opens to bleed fluid pressure off. Once the wheel speeds up again, another valve opens to allow more brake fluid to flow to that brake. This "block, bleed, apply" can occur up to 30 times per second, although most systems do that just as effectively at 15 times per second. That is the buzzing you hear and feel when the ABS engages.

Recently I learned there are indeed some systems that do turn the red light on too when there is a problem in the ABS system and the yellow light is on. On some, the yellow light can flash too for certain conditions. Keep that in mind when both lights are on, but in general, diagnose the red light first since solving that one is likely to solve the yellow one.

That pulsing of the valves 15 times per second is more effective with disc brake calipers because the pads are always right next to the rotors. Little piston movement is needed to apply the brake. Some systems use rear drum brakes. Those shoes have to move a lot before they contact the drum. The need for that is designed into the ABS system. If a parking brake cable is rusted in the partially-applied position, the brake shoes can be held not fully retracted, and they have to move very little to contact the drum. That brake can be reapplied too easily during an ABS stop, reducing its effectiveness.

If there's a leak in half of the hydraulic system, you may never know that on some GM vehicles. A valve in the master cylinder can trip to block fluid from flowing to the leak. I don't know if that valve is used with vehicles that have ABS, but regardless, if there is an inability to build fluid pressure in half of the system, the pressure-differential switch will turn on the red warning light. The ABS system needs to be able to raise and lower the pressure in both halves of the system. Since it can't do that with no pressure in one part, the ABS system turns off, and the yellow light turns on. This is another case where the only problem is in the base brake system, but the ABS is unable to do its job, so the yellow light is also on.

If you're worried about one of the valves in your hydraulic controller, all of my training classes have included a discussion of the self-tests the computer performs at start-up. That takes place while the yellow light is on for the first six seconds when the ignition switch is turned on. All of the electrical circuits are checked for continuity and shorts. Those problems will be detected right away, a fault code will be set, and the yellow light will stay on.

Mechanical things are tested when the vehicle begins moving. The computer wants to see wheel speed signals and an input from the brake light switch. Somewhere along this self-test procedure, the computer pulses the valves in the controller on and off, then it watches for the signals from responding pressure switches. This is where a malfunctioning valve would be detected. If no problem has been detected and no fault code related to that has been set, there is nothing you have to do or fix in that assembly. Sticking valves are unheard of because they are exercised each time you drive the vehicle. Even brake fluid contamination won't be a suspect for an ABS problem because that will cause other symptoms first. By far the first symptom is most often a high and hard brake pedal caused by the lip seals in the master cylinder growing past the fluid return ports. That traps the fluid, then as it heats up and expands, it applies the brakes harder and harder, until eventually, one or two brakes are smoking, or the car won't move. Proper ABS operation isn't a concern if the car won't move.

Brother Steve is going to have to continue on with that. What I CAN share is for a long time, pickup trucks and minivans have had a height-sensing proportioning valve in the rear. Normally that valve was inside the combination valve which sat under the master cylinder. It was a brass block that had the steel lines from the master cylinder running to it. The proportioning valve is carefully-calibrated for the weight and weight distribution of the specific vehicle. Its job is to reduce and limit the amount of brake fluid pressure that can go to the rear wheels, to reduce the tendency of the rear brakes to lock up under hard braking. Trucks and minivans have a wide range of loading possibilities, and no standard proportioning valve can be calibrated to meet the variety of loading conditions. Instead, the proportioning valve is placed in the rear, and a link and lever adjusts it according to how low the rear end is sitting.

"Dynamic" refers to something that is changing. Given that ABS systems are electronically-controlled, and some don't use a proportioning valve, I have a suspicion there is a height sensor on the rear of your vehicle that tells the ABS Computer how to modify how it controls the rear wheels in an ABS stop. Naturally that would need to be given a name that can be hyped.

Dynamic Rear Proportioning is one of the reasons you have both lights, but the problem is in the ABS controller.

GM used the mechanical rear valve quite a bit. However in the case of the DRP system, there is no valve. What they do is use the various signals already on the vehicle for engine, transmission, supplemental restraints and braking to calculate the dynamic load on the vehicle. Then it uses that calculated load to adjust the ABS controls for the braking system.

When you have an issue in one of the items that the system uses to calculate the load it looks at which sensor input is causing the issue and you get a light for that system and it adds a default number for that sensor/system fault into the DRP to keep the ABS working. Except if the fault is in the actual braking system. ABS module, ABS wheel speed sensors, Brake proportioning switch, Brake fluid level are given priority to trigger both lights and chime.

In this case the ABS module fault is telling the system "Hey I'm broke, call 911" so the PCM polls the system and sees that all the other inputs are reporting OK, but the DRP coding says, "ABS module is in failure mode, turn on the brake light, turn on the chime and turn on the ABS light because I no longer control the brakes"

You see this same control scheme as part of the automatic braking on vehicles with that feature. They calculate the dynamic load to control the amount of brake pressure to apply for an emergency stop.