I've had non turning reel handles on some vintage reels, I use some gun oil on them. Put a drop on top and a bit next to the spool side. Then just work the handle and it should spin freely after awhile.
I have a Farlow Serpent that was doing the same thing. I filed the bottom of the knob down a tiny bit with a whetstone. I didn't take much off, just enough to give it enough space between the washer and the plastic. I'm not sure if this would fix your problem. My problem was a slightly bent post. The extra space kept it from binding.
I've had the same issues with the knobs on a couple of old Hardys. The knob post is riveted in place so it can't be disassembled for servicing. Penetrating oil seems to do the trick. The posts seem to be aligned correctly, so I imagine that the caused is due to corrosion or gunk buildup over the years. In any case, they both revolve freely after oiling.