Hooray!! Send up a flare. It's all back together and the lever works smoothly like it should. 

The answer is the threaded part is a separate part that slides inside the collar.  It was so frozen/rusted to the collar it was a screaming bitch to separate them. I gave up a couple of time before finally separating them.  

Here's How I Got It Apart

I pointed the assembly up, filled the cup formed by the collar with penetrating oil and let it soak overnight.  Then I oiled the threads, put a large washer on the collar, and threaded on a 1/2" nut to press on the washer and pull the pieces apart.  With a large pair of ViceGrips on the collar and a box wrench on the nut it took great force to separate them. 

Once separated I used some low temperature Lubriplate grease for the bolt head where it travels in the collar. I was too tired to see if it returns to the index point, but the locking pin (I'd rather call this the locating pin) drops into place by itself pushed by the spring and retracts easily. I wasn't able to clean inside the collar well, but it's working good, and if it happens again I can fix it in 30 minutes next time.  [Incidentally, you don't have to remove the arm from the post.]

 

The drawing & the words in blue below were written while I was still trying to get help figuring out what was wrong.

Here's a simplified drawing of the arm latching/locking device as best I understand it. 

I'm obviously missing something, but if you push on the arm latch lever it simply pushes on the rod and there is no give in the rod.  The rod presses on the threaded end which is screwed through the plate -- nothing can move. This is what I mean when I say I don't understand how it works.

After reading this page you can go here for a more general explanation of my the problem