^^ The starter won't turn as the helix is fully extended, and can't turn any further. By hitting the starter with a hammer, this releases the spring, allowing the starter gear to return to it's normal position. A turn of the key will then engage the starter, but if the teeth are not lined up, the starter gear will again jam, resulting in a single click.
This 'tremendous amount of noise' you refer to would occur if the teeth are worn, or if the starter gear was not meshing with the flywheel gear, and thus, spinning free.
To me, it sounds like the starter gear is meshing with the flywheel, but cannot generate enough power to a/. crank the engine over, before b/. jamming in the 'engage' position, and thus giving a single click as the solenoid tries to activate the starter. It is the starter solenoid that is clicking in this scenario.