Thank you.
Take a look at the fourth picture in my February 14th (4:36p) post (Copied here for ease of reference -
http://imgur.com/Mkq4Efz). After reassembling, I tested the dial spin without the dial ring but with the weight of the dial spinning the wheel pack. It was from that action that I concluded that the drag was still present. Hopefully, that was a valid test.
I had already cleaned the "crud" out but I also cleaned the sheen of grease (somewhat contaminated) that was on the wheel post. I will disassemble the lock and re-grease as per your instructions (being sure to avoid putting grease on the flys but perhaps reapplying the slightest amount of grease to the spacing washers.
I'll also wait for my wife to take my daughter to school before I use her granite kitchen counter-top to test the dial for true flatness.

Because of the upside down test illustrated in the above picture, I'm guessing that the drag is in the wheel pack and not in the dial/dial ring position. Or it could be in the spindle as you noted in your post. Before removing the spindle to test the dial for flatness, I'll take my square and see if the spindle is 90 degree perpendicular in the dial. I'll have to revisit the dial to see how to remove the spindle.
I hadn't mentioned it before but there were slight "burrs'" on the tops of one or two of the flys Although I would have expected perfectly smooth rings, I didn't think they made a difference. Was I wrong?
I'm working at a client site tomorrow but will report back when I am able.
David