. . . when I grabbed the driveshaft and turned the passenger side rear wheel (while holding the drive shaft still), I don't think the other wheel turned at all (this was when the vehicle was in park).
Park doesn't affect the rear wheels, only the front. With the engine off, the car in Park, and the parking brake off, the rear drive shaft and wheels are free to turn. That's because the AWD transfer clutch isn't getting any hydraulic pressure from the transmission fluid pump. So the rear drive train is disconnected from the output of the transmission.
Another test (in addition to the ones mentioned in my previous post) would be to prevent the drive shaft and one rear wheel from turning, and then see if the other rear wheel can be turned. (Will require more than one person.)
If there really is no mechanical problem in the rear drive train, then the AWD transfer clutch might not be getting hydraulic pressure due to a failed control valve, or, the clutch plates are worn out. The latter can happen, fairly quickly, if the car is towed with two wheels (both fronts or both rears) raised, while the other two are on the ground and turning. AWD's need to be carried on a flatbed.
Another problem could be a fault in the wiring from the TCM to the AWD control solenoid. This should cause a trouble code and a flashing AT Oil Temp light in the dash when the key is first turned on. But that depends on the bulb being good. If it's burned out, there's no way to know there's a fault. I'm not familiar with that generation, but in later years, when the key is turned to ON but not to Start, several warning lights should come on to verify that they work, including the AT Oil Temp light and the Check Engine light. If it's the same for the 1999, do the lights work?