Half banana:
Martin Luther was wrong! It is perfectly easy to distinguish faith from the works associated with faith. In the absence of other translators rendering the text in question as “exercising faith” as opposed to “believe,” I conclude that in this instance the JW org have doctored the translation to suit their own interests. It thereby becomes a snub to the “just believe in Jesus” movements. JWs very much want to tell you that they have the works to show that they are doing a worldwide preaching work.
I don't think that by Martin Luther saying, "It
is impossible, indeed, to separate works from
faith" he meant that religious groups ought to emphasize works over faith as a means of acceptance, and to be saved. As a Protestant reformer, Luther held that salvation / eternal life are not earned by good works but are received only as the free gift of God's grace through the believer's faith in Christ Jesus as redeemer from sin. I think his purpose was to advise Christians against a laid back lifestyle, thus he wrote that "faith is not inert."
So I take his comments within the above context. I agree with you that some religious organizations like the WT emphasize their kind of "works" over true Christian faith, which is clearly wrong.
At the other extreme, some Christians seek to stay away from any Christian responsibility from their daily conduct. To prove the WTS wrong, they fall in the trap that all you got to do is simply "believe" intellectually that Jesus is Savior. These individuals may point to Acts 16.31, where Paul and Silas told the jailer, "Believe in the Lord Jesus and you will be saved" when the jailer asked them: ‘What must I do to be saved?’" In the Greek language used here, "believe" appears in aoristic mode (punctiliar action), so many have concluded that for Christian salvation, all one needs to do is ‘acknowledge’ Christ as one's Savior. What they don't realize, is that acknowledging Christ as Savior is the FIRST step one must take in a life-long course of godly worship. One must endure till the end. Otherwise, all those Scriptures extolling endurance and fine Christian living would be empty in meaning.
In John, we are told that one must "believe" (a word related to "faith") that Christ is the Son of God, and God's savior to the world. As noted in my previous post, the word "believe" appears as a present participle with the article (Lit., "the believing into him"), leading scholars to explain here, that "faith is sought of as an activity," especially denoting the exercise of saving faith."
If ‘faith is an activity,’ and one can ‘exercise saving faith,’ at John 3.16, therefore translations that indicate so are not too far from the author's intention in transmitting that Christians must be actively obedient to Christ, fully trusting and relying on Him. "Active faith" is the opposite of "inert faith" which Luther warned us against.
This is not to say that "exercising faith" is the best translation possible of the Greek word at hand, but one must ask why is there so much aversion to the thought of such activity in one's Christian life? Dislike of the WT Society (I am with you there) need not transform into the same dislike for the thought transmitted by a Bible version mentioned on my previous post:
"For God loved the world so much, that he gave his only begotten Son, that whoever has an active faith in him should not perish, but have everlasting life."