Yes, it should spin. That is a friction fence and I have been told it has some sort of spring set up inside to provide light friction so that when the gear is spinning the friction moves the fence against the wheel pack and into the wheel gates when the correct combination is dialed. Brake cleaner, lacquer thinner, etc, should loosen it up. I wouldn't open it up except as a last resort.
The Yale friction fence lock in my National is slightly different. It does not have the crimped end but is open. Unfortunately, the inner springs are missing and a wound spring was added to the outside of the fence to make it operational. Here is a picture of the inner barrel that shows one of two .010" deep slots. I assume there were slightly bent flat springs in there. IDK. I have never had your style apart, my other 4 fiction fence locks, which are that style, all worked well.
