1998 Mercury 8HP 2-stroke has steering friction issues

It is serial #0G590511.
The steering friction lever (co-pilot) is difficult to turn but does move when tapped lightly with a hammer.
It seems no matter where it is positioned, the friction is quite small. The engine will sometimes turn slightly by itself.

So, do I need to replace any parts or perhaps adjust the nut up top?
The manual says nothing about this.
Otherwise, the motor is operating perfectly!

Here's the page from the Factory Service Manual.
Shall I tighten part #26 the nylock nut?

I am resurrecting this old thread because there is some new information.

Turning the nylock nut part #26 in the image above definitely controls the amount of friction.

However, the steering friction lever (co-pilot) is still difficult to turn by hand.
I tried penetrant on the threaded rod part #19 with some success.

Not seen in the image above is a grease fitting installed on the port side of part #1 (up top) that (I guess) is supposed to lubricate the threaded rod.
I have found that I cannot get grease into that fitting (never have).
I don't know why the fitting does not appear in the exploded diagram.

Is there any Mercury technician/engineer that knows what is going on with that mystery fitting?