Listen to this noise...

Yes when I removed the cap the rotor can move up and down by hand. The contacts are all getting worn down on the cap at the bottom of the step and starts to grind into the plastic. Fairly sure you found the answer with that shaft bushing.
Sounds like A/J and I may have found it? The rotor fits on pretty tightly and should be pushed on pretty hard. If the nylon gear is still fastened with its roll pin, there should not be 1/8 up and down play on that part, but there is another place to check: there is a spring clip under the felt wick that holds the upper part of the rotor base, that may be missing or maybe not seated as there should be very little up and down movement on that rotor. You see what it can do when it moves.
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