The shock rebounds when it is used with a spring. It is used in conjunction with the spring to dampen the springs bounce. Stand the struts upside down overnight with some paper towels underneath to see if they leak.
I've blown a couple sets of AGX's in my time. One indication is like you've got with the shafts not extending (especially on setting 1). Another is when you try to push the shaft in it doesn't go in evenly. It kinda goes stop-go-stop-go-stop. Yet another indication is the making of a yowling noise when you compress the shaft. And then there's the leaking when being left upside down.
shocks. push down and coming up on shock travel should both be a slow action given the rebpund is slightly faster. a blown shock will have no resistance and will not come back up due to... loss of oil and gas pressure. a bent shaft will get stuck somewhere down the road when u push in.
also another method is checking for excessive play... push down on strut, and quickly tug on shaft back and forth like as if you're alone in the toilet with a playboy. a decent amount is ok. just as long as it doesn't move freely like an inch or so before the rebound catches up.