The last three quarters of a turn of the spring is flat, and coiled to a smaller diameter than the body of the spring, so that it can sit snugly around the locating nub welded onto the frame, with the rubber isolator between them. With most of the last turn missing, the spring is effectively resting on a single point. The first picture shows its proper position - you can just see a rusty circle behind the isolator that has also rolled out of position. Were the spring and isolator on that pad before you lifted it? You probably can't tell now, but the risk is that the spring becomes free to move out of position, and potentially fall out, or worse, fall towards the tire and rip it. Tyipcally, the limit of extension of the shock is intended to make sure that the spring doesn't come loose even under full travel, there's no guarantee of that now.
Al that was preventing the spring from moving any further was the now larger next coil of the spring, which was probably rubbing against the nub, and producing the sound you heard. You'd likely be challenged to even lower the car back onto its suspension with the spring returning to its proper location, but there's no guarantee it'd stay there.
I'd park that vehicle until you can get a new spring. It's just not worth the risk of using it.