Why is 1699 displayed when cheap multimeter is loading?
Assuming the DMM is working properly. When it is switched to AC the DC meter portion of the internal circuit is connected to an AC to DC precision rectifier. The precision rectifier is made with diodes and an op-amp. The op-amp may not be able to swing all the way to the reference voltage, and it may initially saturate. 

The displayed voltage of 1699V is well beyond the 750V scale of the meter. Possibly they change the reference from 200mV to 2V (rather than the front end divider) between 200V and 750V  ranges. I doubt it's anything more than a coincidence. You can do a simple experiment. Leave the meter in a cold area (but not cold enough to cause condensation) for an hour or so and try again to see if the reading changes. 

If so, then it is the maximum number that can be displayed but it is not a practical number since it's beyond the maximum range of the instrument (and you'd be nuts or have a death wish to put anything remotely like 750VAC on a meter of that caliber anyway, let alone 1.7kV). 



And don't put those probes in the wrong holes. Very bad things can happen to cheap meters, especially with high fault currents and mixing up current and voltage sockets. Better meters are protected so they will only blow an expensive fuse at worst and not injure you.