Fully rotary drilling is one of many useful technologies used for the exploitation of petroleum and geothermal resources, but fully rotating drill-strings are extremely complicated. Therefore, according to the Hamilton principle, a non-linear coupled bottom hole assembly (BHA)-bit-formation-wellbore model is proposed for BHAs with bent-housing positive displacement motor using the finite element method to investigate the dynamic behavior and steering ability under fully rotary drilling. The impact force, acceleration, axial loading, torque, and dynamic stress were simulated, and factors influencing the dynamic steering forces were investigated. The results indicate that the impact force, acceleration, axial loading, torque, and dynamic stress under fully rotary drilling are much higher than under conventional drilling. The numerical simulation and field test in well B confirmed that the rotation of the drill-string is conducive to the hold-on of the deviation angle. With the increase in the weight-on-bit, bend angle, and stabilizer height, the deflecting force on a drill bit increases. Conversely, with the increase in stabilizer diameter, the deflecting force on the drill bit decreases; the lower the deflecting force, the better the effectiveness of hold-on. With increasing deviation angle, the deflecting force on the drill bit first decreases and then increases. The present model can provide a theoretical basis for wellbore trajectory control and optimization design of BHA.