@mackat, I was given this arm in trade and haven't even mounted it yet. I'd like to try it in the back position on my two arm Victor plinth.
I might try to take the lifter apart again and give it a good cleaning and inspection, look for any scores, burrs or anything that might impede the operation. Assemble it dry and see if it works smoothly. If all looks good, than refill it with the silicone oil. On some I believe you just fill the groove in the piston with the oil. I just looked at mine again, the lift has a screw cap on the bottom, if you fill the chamber it might take forever to drop. With the starting and stopping it may be trying to bleed air bubbles.
Take lots of close up pics and post them here if you get back into it again.
As far as the tonearm moving outwards, do you have a lot of anti skating adjusted in? Might be part of the problem. Try it with no anti skating.
BillWojo