You already know that the needle wheel is damaged. Why not replace it ($8)
and go from there?

The needle wheel is the heart of the whole device. I had to replace mine
already due to wear. As it spins over time the needles get smaller in
radius due to friction with the housing and then it needs to be replaced.

My advice, replace the wheel and take it from there.

I ordered the wheel - I'll let you know. Thanks.