In the combination valve there is a piston that normally has brake pressure on both ends of it, front brake circuit on one side, rear on the other.
When there is a pressure loss on one side it allows the piston to travel from its neutral position which then closes contacts to turn the light on.
Regarding the front brake that is now locking up.
Very unlikely the front brakes have suddenly developed super powers or suddenly started to drag, what happens is your back brakes having failed are not contributing to stopping the truck, because the front brakes are now doing all the work, any variation in traction will cause a situation where the weight of the truck is pushing forward and overcoming the stopping power of the front wheels until one or both start to skid.
If you were to test drive it now with the left wheel on pavement and the right on a gravel shoulder, the right will lock up, drive on the other side of the road and the left will lock up.
You are on the right track getting new lines and wheel cylinders, once you get the rear brakes apart and repaired as needed there is a good chance all will be good.
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Today's Featured Article - A Lifetime of David Brown - by Samuel Kennedy. I was born in 1950 and reared on my family�s 100 acre farm. It was a fairly typical Northern Ireland farm where the main enterprise was dairying but some pigs, poultry and sheep were also kept. Potatoes were grown for sale and oats were grown to be used for cattle and horse feeding. Up to about 1958 the dairy cows were fed hay with some turnips and after that grass silage was the main winter feed. That same year was the last in which flax was grown on the farm. Flax provided the fibre which w
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