Another thing that you may have overlooked is can the arm move out. i had it on mine that the arm siezed and wouldnt move out. Took me ages to realise what i should have first checked.

Just to confirm the way that it is on your picture is the wrong way round. The long section of the arm (measured from the pin) should face the flat on the spur so when the arm is forced out it the spur grips the arm. Having it on the wrong way is probably what has caused the damage to the spur.