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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