Steering wheel lock is just a bar that's activated by the key turning. If the key doesn't turn, it's unlikely it's the bar. I second the idea of using an orbital sander. I don't think contact cleaner will make any difference. You could try flushing the mechanism repeatedly with WD-40 to get dirt out, then try the lubricant and the orbital sander. You may need to drop the column, drill out the pin and remove the whole assembly. It's not that big of a deal. Maybe an hours worth of work.

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1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13