Sounds like Yes, it's working - jack the rear wheels with a wheeled floor jack and see if the front wheels will pull it - if it's working, then it's simply an indicator problem.
If you have the LCD display, you first need to unplug it from the wiring harness and plug it back in - it might simply be a bad connection causing a loss of signal to activate the AWD segment. If you have the indicator light in the throttle housing, it n=may simply a faulty bulb - Polaris (in their wisdom in this case) installed a diode in parallel with the AWD indicator bulb so if the bulb failed, current would flow through the diode to keep the AWD active.