You are correct, this output from ntpq -p indicates that the NTP daemon is not syncing with the upstream peer. What does the offset field contain? If the time offset between this server and the remote AD time provider is high, ntpd may refuse to trust the peer. E.g.,
[root@localhost ~]# ntpq -p
remote refid st t when poll reach delay offset jitter
172.18.11.4 .LOCL. 1 u 26 64 377 0.421 -1326.9 10.523
You may have success in setting the time directly with the date command, such that it's close enough of an offset for ntpd to start synchronization and take over.
Setting date manually offset is now -359898