Don't think all wheel drive kicks in

IF you have both front wheels in the air then either wheel will spin freely unless you have diff lock or limited slip diff. That is the nature of a diff..wd means that all 4 wheels drive but only when you have a limited slip diff or a diff locker. in action . If you have both of one side wheels in a bog you will not go any where.

do you have locking hubs in the front end? if not it could be your trnsfercase accuater not ingageing all the way.

I had a 4x4 year ago. Do you have front locking hubs ? I don't think so if you did I would ask if they were in or out. If there is nothing else It has to be coming from the transfer case. As far as I know no manufacture makes a true 4 wheel drive but Jeep except for maybe Raptor or Power Wagon. Most come with an open diff in the rear one wheel drive unless you order it special and the front you can't even order a locker if you wanted to 99.+% of 4x4s have open diffs in the front. Jack up one front wheel and one rear wheel if you didn't order a special rear end if you try to drive off the jacks you will sit there and spin your 2 wheel drive and not move.Ford says if you have worn tires or not the same air pressure in all tires it will do this. I think you have a bad u joint or pieces broken in the transfer case or it is out of adjustment. Jack car up like I said before and when the wheels spin without pulling it off the jack stands crawl under and see where the noise is coming from front or transfer case.I wonder if your shift motor could be bad they are about 65 dollars

Quadratrack transfer units work by way of an internal fluid coupler (same as your mechanical clutch fan but bigger) It is always on but not always engaged. It engages when the rear wheels start to slip.
It should lock in low range though. (in low range you should not drive over 15mph).
if the front wheels won't engage at all, then either there is something wrong inside the transfer case or inside the front differential. Both are usually noisy if they have failed but I've seen some that the ring gear has been removed as well as the driveshaft (sometimes) after the diff has failed, so it can be driven. Find another shop that's more familiar with that unit and have them take a look at it if you don't see anything obvious.

Having 4 wheel drive is not actually the case unless you have limited slip on both axles. Do you know if one wheel will spin on both axles. If you can't get either wheel to spin on the front axle and one will spin on the rear then I would agree your not getting front wheel drive. Since you can tell a difference between hi/lo the transfer case is definitely engaging

sounds like either a fuse or the do u have locking hubs that need to be engaged also when using 4 wheel drive there is actually only 2 wheels turning usually passenger front and driver back sometimes u also have to drive backwards to engage and also disengage 4 wheel drive finally it may be a transfer case problem check drive shafts and u joints make sure they are engaged

You have a switch down by the shifter, on the side. You simply toggle the switch to lock position. You don't what to do that on dry pavement. Just put the switch in auto. The computer will engage and disenage when needed. Don Suzuki guy

Is it manual front hubs?

Take the hubs apart, inspect them, and clean them, especially the one that you heard a clunk, something might have broke in the automatic hub lock. Make sure everthing gets put back exactly the same, or you'll have more problems. If that doesn't work, then there is something wrong somewhere in the transfer case.

lock it in and jack up and see which part isnt locked
transfer, front end
front end uses vacuum actuater
and transfer uses a electric motor
front driveshaft shouldnt turn when in park and front wheels off the ground
front wheels shouldnt turn with one wheel up