If "agency" is making decisions and performing corresponding actions in the real world, then LLMs most definitely LOOK LIKE they're making decisions (what's the next token? which tool to use? what's to say, in general? what idea to convey?) and performing actions (tool use). Can we tell whether they are ACTUALLY making decisions? Well, are the people around me "actually" making decisions? Or are they simply pushed around by circumstances and external forces?
Am I actually making decisions? Did I like DECIDE to write this comment? Maybe? I have no clue...
I think you're mildly obfuscating the issues at hand by diving too deeply into philosophical questions.
It's quite simple, the agency that the LLM appears to have is actually your own. Without a prompt an LLM does nothing. It has no thoughts between prompts about you or your problems.
You are implying definitions that don't seem to be mainstream; thinking is internally manipulating information to reason, infer, plan, solve problems, and form judgments or beliefs. Also -- "Without a prompt an LLM does nothing. It has no thoughts between prompts about you or your problems." it sounds like you paint this like it's something fundamental? It isn't. Nothing is stopping you from streaming information to an LLM and letting it process this information, this is precisely what people are trying to build.
A free will versus determinism argument doesn't really have a place here. Consider instead that humans factually have 'the illusion of agency.' The LLM does not even that have that. It cannot act on it's own, it has no ongoing drama or intention. It only reacts to prompts.