Hi Dan
Good photos. It seems that I was incorrect in assuming that for some reason the arm per se wouldn't lower onto the record. It seems that mediabobny was correct, and it's failed stylus suspension causing the stylus to 'droop' out of the cartridge and making contact with the record before it should, and it is this that is preventing it operating correctly. 😳 The only way to solve this is either a repair or replacement MMC.
Don't worry about the counterweight coming off - it gives you an opportunity to clean the old lube from the rotating scale to ensure it can rotate fairly freely on the counterweight. The aforementioned 'tube' will come out of the counterweight (there's a screwdriver slot cut into the end of the tube) and everything should be cleaned and re lubricated before replacement. Replace the tube first (luckily you still have both rubber mounts - leave these where they are and slide the tube over the whole thing - the real PITA is if the end rubber gets stuck inside the tube, because it takes some getting out - ask me how I know.....) then the counterweight, and callibrate as per Chris's earlier instructions.
It looks a nice one that, and it will be good to get it all working properly. I have a reasonable condition 2-way remote control for the 7700 available if you fancy one....