The button is attached to a rod that is attached directly to the latch mechanism. The button is showing you what the latch is doing. So i am going to guess and say that your power lock is the issue. It is either binding up at the end of the travel or it is binding against something.
The best wat to check to se the issue is to remove the door. Take the linkage rod off of the power lock motor. Operate the lock using the button and see what happens.
If it locks, the problem is with the power lock motor, the motor attaching rivits, (what holds it to the door), or the linkage rod, (very unlikely). If it does NOT lock then the issue is within the latch itself.