Dennis, now that it has Kroil and WD40 on it, you will need to use either alcohol or acetone to remove the oily residue before this will work. However, an overnight soak in vinegar, or one hour in your parts cleaner with vinegar will dissolve that rust. If you didn’t want to stink up your parts cleaner with vinegar, you can put the part into a ziplock bag, add vinegar, squeeze out the air and zip it tight. Then just drop the bag into your parts cleaner. It will clean the rust off inside the bag. I’m pretty sure though that those parts are going to be so pitted that they will not operate smoothly again.
For the most part I’m not a fan of South Bend fishing reels. I have a few of the vintage Ohmori-made South Bend spinning reels made in Japan that are superb but when their production moved to Hong Kong the quality went way down. In general when South Bend became Gladding-South Bend i lost any interest in them. I personally have never seen a Gladding South Bend reel that I liked very much. With this reel you might consider soaking those stuck parts in vinegar. That will sometimes help with getting rid of rust. You gave this reel a good try but I honestly feel it was the quality or lack there of that messed up the line guide on this reel. Good try Dennis! At least you made it useful again. - Chris
Before Gladding South Bend marketed the 606 and 707 French built reels, that company went out of business.When Gladding took over they went to Asia, at first the reels were made in Japan, the higher end ones were made by Ohmori and later the 700 series and other cheap reels went to Hong Kong. I have the worm gear drive 900 series reels built by Ohmori in Japan. Both these and the Hong Kong built 700 reels are listed in a 1969 South Bend Gladding catalog I have.