I also tried some very light "persuasion" by trying to free spool lightly in reverse off of a tree, again, no luck.
It really feels like more than just rust or smudge or crud because in free spool it feels locked up.
I have a new to me Warn 8274 that came on a '77 fj45. The winch has a build date of April of 1977. When i took delivery, the free spool knob was very sticky so I took the knob out, cleaned it up to operate freely in and out. The winch operates as it should with the knob pushed in and engaged...