It sounds to me like the rotary switch behind the cylinder is broken. I had something real similar occur. I removed the entire locking mechanism. You won't need to take the dash off but I already had the dash apart for HVAC issues so this was easy. There are directions here:
http://skinnerbox.steaky.org/123_DISK2/program/Chassis/46-640.pdf
I took mine apart cleaned out old grease. Relubed and put back together.