It did explode, but the contents may not have been completely mixed. An artillery shell, well the more modern ones, uses a binary warhead, wherein two precursor chemicals are mixed by the action of firing the shell. Since this shell was not fired, the only mixing that probably occurred was after the bursting charge went off. Normally the function of that charge is to produce of cloud of sarin vapor, the sarin having been created by the mixing at firing. In this case most of the precursor chemicals would not have been mixed, merely dissipated by the explosion. I've read reports that indicate that much sarin, if properly dispersed, could kill 80,000 people. (Although that degree of "proper dispersion" would seem highly unlikely).
If the shell was not marked as a chemical one, it's possible that the scrotes who converted it to an IED did not know what they had. If they did know, I would have thought they'd have tried for a more effective use, although they may not have understood enough about how it worked to know that it would only work properly if fired from an artillery piece.
Unless their primary objective was to send the message that they had this stuff and would use it in more "effective" ways "next" time. Scary either way.