[Minnewaska]

Yup, grease on the pawls is a no no and could be the issue, if you did so. If you over greased surrounding gears, it may be slid into the pawls, I suppose. Winch grease only needs to be applied lightly with a brush.

Could you describe what you mean by slipping? I assume you mean the drum is rotating backwards, not the lines are slipping. Is it crunching and banging as the drum spins backwards, like the pawls are trying to catch, but miss the ratchet? Or is it not holding at all?

The pawls themselves wear out too, usually noted by a rounded edge that fits into the ratchet, rather than a nice square edge.

 

[Minnewaska]

.....If I lift it a fraction of an inch, it catches and "sticks".....

You mean the drum will move upward? That doesn't seem right, but maybe it is for your winch. I'm not a winch expert. While I've serviced several models of Harken 2-speed, their drum gear doesn't even come in contact with the pawls. I'm sure others do. Still, one wouldn't think that moving the drum gear upward would suddenly cause a stuck pawl to flap closed. Could a bushing or other insert be missing that is causing misalignment? Just shots in the dark. What winch do you have?

 

[Minnewaska]

Clean everything down with mineral spirits and start over. Good luck.