M.A.
Sounds like you have a problem on your hands. First off, make sure there are no health issues or developmental issues. Usually by this age, a child is bothered by having the mess in their pants. So, first of all I would go to the doctor and have the toddler/preschooler checked.
If everything is alright, then you need to just put 100% effort into the potty training. When you are potty training you have to watch them like a hawk, every second. You are never going to get the child potty trained if they aren't even in the room with you. You need to be right there, so that when you see him starting to make the effort to do #2, you stop him and take him to the potty.
He is old enough now that he should atleast be telling you after he has gone. If he is not even verbalizing that he has gone in his pants, I am a little worried. My suggestion is that you commit to spending a week or two right by his side, I mean don't let him out of your sight. That is probably what it is going to take. I can see how the little training potty would definitely not work for you, at 3 1/2 he is too big for it.
Go get a children's book about potty training and read it to him several times a day. I would even look for a video. I also am concerned that it sounds like you aren't putting him on the potty to try to go often enough. When you are potty training, you need to take them to sit on the potty every 30 minutes. They need to sit on the potty for atleast 2 minutes or until they have gone. If you will do that consistently for 2 weeks, he should be going on the potty regularly by the end of 2 weeks. Watch him like a hawk and make him try every 30 minutes.
If his pullup is wet when he sits on the potty, even a little damp, make sure you put a new one on, you want him to get used to being totally dry and fresh so he will really want to not go in his pants. I usually think that we shouldn't offer candy for pottying, because I don't think small toddlers should have the sugar, but he is old enough it isn't going to hurt him, so do it.
I would also go out and buy several packages of some underwear that he will love, like with his favorite character on it. Tell him that when he starts pottying in the potty, he will get to wear them. That may help. Just emphasize that big boys do not potty in their pants. And he is old enough to tell him that it is gross and yucky. Make him feel like it is gross so he won't want it on him.
You can do it! Some kids are just a little stubborn about the potty training. It's simple for some and takes a long time for others.