There should be some lubricant there as the advance (top) plate will move on the base plate when the vac advance operates. You can suck on a hose to the vac advance unit and see it move. There should also be a small core of sponge in the shaft (under the rotor button) which is used to keep a little oil to drip into the shaft too. At tech we were taught to put a couple of drops of oil under the sponge (pop it out with a little screw driver) and a couple of drops of oil into the sponge.
On that dist. you can unplug the points (or remove them), remove the vac advance unit (gently, it is almost certainly broken already though), unscrew two flat head screws from the outside of the housing and the advance/base late should come out. Clean it up good and proper then lubricate between the plates. Also clean out the mechanical advance plates that are part of the shaft, you will see them once he plates are out. Careful the springs stay on though, without them it will not work properly.
Re: vac advance unit, use a hose to the vacuum tube and suck on it. Put your tongue on the end of the hose to retain the vacuum and if it holds vacuum then all is well. If it leaks then either get another one or lock up the advance plate so it is not necessary. Alternative to tongue option is get a 'mightyvac', which I just never made it to getting.
Check play in the shaft, side-to-side motion. If it jiggles in the shaft send it for rebuild, as the play will interrupt the points and bad stuff happens.
If you are rebuilding it look at a 'Petronix ignotor' (or is it igniter?) points replacement. Very cool unit, better spark, more reliable etc. I have two of them and highly recommend them.
About $200 -ish
For dist rebuild speak to local Volvo specialist, or a mechanic with old Holden' and Ford's out the front - they are the same Bosch distributor. they will know who rebuilds them. Voldat had one done for me years ago.
