Most of the tow release levers I've seen will hook in a slot in the frame to release the drive, and spring to the drive position when released. It operates a bypass valve inside the hydro unit.
That you were able to push it without sliding the wheels says the brake is released and the tow valve is open. With the tow valve closed, it should lock the rear wheels.
Tying to drive it with the tow valve open will only cause there to be no movement forward or reverse, as if in neutral.
Are you saying when you have the motor running, then move the drive lever forward or backward, the engine is loaded down and killed? And the tractor does not move? But with the wheels off the ground they turn without loading the engine? If so, that sounds like a mechanical failure inside the hydro unit, a failed bearing, failed pump or hyd motor. If there is a drain plug, might drain some oil in a clean glass, look for metal.
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Today's Featured Article - Fordson Model N: Field Service Operations and Lubrication - by Anthony West. The daily or weekly servicing of any vehicle is of the utmost importance, and in days gone by when our favorite tractors were doing an important and Commercially vital job on the farm, these service operations would make a major difference to the running costs and economy of the farm. This being so, it surprises me to see how many enthusiasts attending rallies, shows etc, seem to be unaware of the importance of this constant attention. Possibly the modern machine with its 6,000 mile or even once
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