Want to add. The older "N.P.D" Clutch markings instead of the later "OFF and ON" markings, For some reason the markings are not quite aligned with how the clutch operates so it only goes to half through AUTO intead of making it all the way to D.
It moves about half way down towards the Auto 'spot', so whatever mechanical link exists appears not to be broken.
To be honest, I have no idea how far it moved originally - it worked superbly, so I never thought about it...
Thats normal on the older N.P.D markings as you have described. The clutches only go half in AUTO.
The know should be on the "on" position when the head is kicked down, if it only goes halfway then the clutch isn't engaging properly to the on position
On the later DC04s, and all DC07s onwards etc. marked with ON and OFF then yes it should go fully round to ON, If its the older N P D markings then the clutch only goes round to half way through AUTO and not to D. This is because the markings on the cleaner head are slightly off for some reason.
I had the same problem with my DC04 Absolute when I had it. Took me a while with a spare ON and OFF marked cleaner head to understand that NPD heads are slightly off marked. The AUTO is slightly larger..
Hope I helped!