Just for clarification, what are you calling position 2? You are referring to the position where the glow plugs come on, correct?

You need to get the key back to position 1 (radio on) so that you can remove the cylinder without surgery. I don't believe that this has anything to do with the steering lock. All that happens between position 0 and position 1.

I've read here about using small palm sanders or orbital sanders in contact with the key and/or cylinder to help vibrate things, though I've never tried it. I'd try squirting some WD40 in there. Then take a short dowel and hold one end on the cylinder and press the sander (without sandpaper) on the other end and then jiggle the key while it is vibrating. Get it to position 1 and STOP to remove the cylinder.

__________________
83 300TD, 260,000 miles, aka "Dusty"
6 vehicles, 2 cup holders (both in the dump truck)