disregard the fan switch; it is just a fan override.
sounds like it could be a fan motor or capacitor issue outside, but without more info, that could be wrong. have you been able to observe a defrost cycle in its entirety ? if there is ice buildup outside, periodically, the defrost cycle will turn off the outside fan motor, but continue to run the compressor. additionally, the reversing valve will de-activate and run hot refrigerant gas through the outside coil to melt off ice (ice buildup is normal during heat mode below 32 degrees). once ice is melted off, the system returns to normal heat operation and the outdoor fan will run again.
in normal heat mode, the larger of the two freon lines will be hot. this is how you will know it is not in defrost. if it is not in defrost, the fan should be turning. if the heat pump is malfunctioning, the aux heat will kick in and maintain temp inside.
run the following test -
turn your thermostat off until the house is 55 degrees. in heat mode, raise the thermostat setpoint to 70 degrees. observe the outside unit the entire time it's running. is the larger of the two freon lines hot ? is the fan running outside ? is there ice on the coil ? does a defrost cycle occur within the first hour ? what is the temperature outside ? if the defrost cycle occurs, the fan should turn off (outside) and compressor should keep running. when this happens, does the larger of the two freon lines change to cool ? how long does this cycle last ? is the ice gone ? when it returns to normal mode, the fan should start running again and the larger line should go hot again. is this the case ?
after the above test, set the thermostat to desired setpoint. after it cycles off, time the off cycle. also note the temperature drop at the thermostat. if it does not cycle back on after the temp drops 4 degrees, note the time lapsed. report these findings for further response. thanks.