The save of this experimental fort (built solely to test this feature).
Wow, awesome. Thank you for uploading that. I tried to get archery practice to occur by following your checklist first, but it just wasn't working. My dwarves had the crossbows equipped, quivers equipped and full of bolts, etc. So then I looked at your save to see what you'd done differently from me.
I noted three things that were different: you had skill in Marksdwarf/Archery; you had explicit material bolts assigned to both hunters and the squad; and you had explicit crossbow assignments under equipment, rather than individual ranged.
The first thing I changed was to unassign all the barracks definitions (all four), then went into the
military
equipment screen and changed "ranged, individual choice" to "crossbow" as you had. I waited a few seconds of active game time, then went back in and verified that the crossbows had all been assigned correctly (green checkmarks). Then I remade the barracks, all at once (without hitting escape -- just moved the cursor to the next building). My archery target was set up off to the side, partially behind a stone wall. I made sure the barracks definition from the target overlapped the other three buildings.
And voila! The militia commander shows "Go to Archery Practice"!
It's also worth noting that even before examining your save, I was able to get them to fire their bolts at enemies when I gave kill orders. They just weren't very good shots, since they'd had no practice.