I finally managed to steal a few minutes to take this thing apart, which it did readily enough. Turns out the "broken pinion" tooth was just bad light and old grease, so that was good news. I managed to get the whole thing back together after a bit of struggle. There must be some minor damage or wear on the spline teeth on the bottom of the top pulley, such that the spindle shaft only goes in at one point in the rotation, took me a while to realize that. There's also some vertical slop in the spindle up and down, looks like maybe Grandpa took this apart at some point and misplaced a spacer or two.
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The only remaining problem is that the quill return spring is broken, dagnabbit. I've been looking online for a replacement, a very specific 5" long torsion spring with a loop on one end and a 90 degree bend on the other, so far no luck. Any suggestions on a source for such a spring appreciated. "Springs R' Us" perchance?