To test AWD, a gravel road and "hit it" will tell.

I had a sort of similar problem on a later Durango with console switch. My dog, left alone for a while, would walk over the console and step on the switch on his way to the front seat. He would press it down hard and it wanted to go into "N".

Getting all the way into "N" was one of those deals where you press the switch, put it on N, press the brakes 3 times and wiggle your nose 6 times (or something like that). The dash light flashed but it never went all the way into "N". I had to pull the console cover and use a dull knife to pry the switch back to normal position. After about the 3'rd time after I got it back to normal I pulled the switch connector and no more problems. AWD is fine.

The dog (RIP) recently suffered a stroke. Despite or maybe because of his love of the front seat we loved him dearly.