What do you mean, the bolt will only go back about an inch and a half?
During firing, or when manually cycling the action using the charging handle?
With an empty magazine installed, does the charging handle come back far enough for the bolt to lock in the open position?
Wait a second...you said there's a crack developing near the forward assist?
Remove the upper completely from the lower, take out the bolt carrier and charging handle, and look at the forward assist mechanism. Unless you're pressing on the forward assist button, NOTHING should be protruding out of the forward assist's bore into the bore for the bolt carrier. If it is, it can very well be your problem.
Cracks anywhere in the upper receiver are not tolerable. The receiver must be replaced and the old one scrapped. You sure as heck don't want it to fail catastrophically while firing it.
Another test: Remove the bolt carrier, and with the upper completely off the rifle, place the back end of the bolt carrier against the buffer plunger. By hand, press the carrier back into the buffer tube and see if it'll go all the way to where the gas tube gooseneck stops it. It should be possible to push it back that far by hand. If it doesn't go back that far, something's not right with the buffer and buffer tube assembly. Press in the detent pin, remove the buffer, and inspect all the buffer assembly components.
And did you check the gas tube to ensure that it's properly connected to the gas port in the barrel?
CJ