Thanks for all the help.
Based on the input, I tore down the reel partially to check washers and bearings. Btw...nobody warned me about the freespool engaging/disengaging piece with the tiny spring on it that fell out. .
Of course I can't figure out how it goes back so I now have freespool all the time.
Washers: Since I have no experience with drag washers, I checked for visible signs of wear but to be honest didn't think they were that bad. I made the type of check as one would do on clutch plates on cars or motorcycles. I didn't see any circular slipping marks of any kind. Am I just looking for the wrong signs of wear? I called on a friend who has some aftermarket washers for the squid and he'll help me out I guess.
Bearings: I could not get the #$%^ things out. BassMaster, I didn't have an old bail so I tried a dental hand tool. The sharp curved one that everyone dreads. I couldn't get neither right nor left ones out. Do I just get something under them and pull real hard? Maybe I'll just leave this to my friend as well.
All in all, not a bad experience. I hope most reels are as simple when I eventually graduate from the squid. Once again, thanks for the all the help.
ps: Mike P: It has brownish red sideplates, had a plastic black torpedo handle (I swapped it out for a 965 handle). The hollow feeling is experienced during casting and reeling. Spool does seem to shift side to side a bit. The washers were 3 metal and 3 black rubber like washers ending with a tension washer (does the direction of the tension washer matter upon re-assembly?)