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Kindle 4, like Kindle Touch (with the latest update) will automatically select a dictionary that corresponds to the language of the book. The language for the book is one element of its metadata (and at least in HTML can be overridden by applying appropriate 'lang' attributes). So if the book is tagged as 'English' it will try to find a dictionary with English lookup. If Italian, it will look for an Italian dictionary.
I can think of two possible issues: 1) the book doesn't have proper language metadata set 2) Kindle hasn't 'registered' the presence of the English dictionaries somehow (Settings-->Dictionary should show 'English' along with an option to select one of the two English dictionaries you have).
Regarding 2), there have been some reports that dictionary lookup stopped working after applying a software update. I know first hand of such a case with Kindle Touch, and K4 also got an update recently; perhaps it has a similar issue. The workaround is to Archive the English dictionaries (assuming you got them from Amazon) and then download again. Then go to the dictionary settings and select the default you want for English.
As for 1) I would first download another english book (say from gutenburg.org) and see if dictionary lookup works with that. If it works, it means you need to fix the book where the dictionary lookup is not working. The free tool, calibre, will provide the ability to set the language metadata (I believe even without needing to strip DRM, if this is a book from Amazon).
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