One of my NAAs has the live pto option, and a combo Sherman.
(It had a loader too, with a front mounted hydraulic pump, which I removed)
If you look closely at the ebay listing (it's still up),
just below the long lever, there is a small blade style switch.
Mine has this too. Turning the blade one way, live pto works, lever forward tractor moves, lever back tractor stops.
Turning the blade switch the opposite way, the live pto lever does nothing. Tractor moves and pulls fine, and moving the lever forward or back does nothing.
By your description, the blade switch must turn off/divert hydraulic flow away from the live pto, making it 'locked up' all the time.(my best guess)
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