Likely the reason the swivel won't lock into place is the middle tab on the pedal is broken off. This usually is the result of what you suspect: Numbnutzes pulling on the wand without stepping on the pedal to release the swivel. Also, very high-mileage Kenmore power nozzles will have the locking ridge worn off of the swivel so even an intact pedal won't lock.
The pedal costs about $7.50 from Sears (plus shipping of course). It's dead easy to change. It attaches to the elevation wheels axle by snap fit. You can push the broken one off carefully, then install the new one in about a minute.
Let's see. Bearings on the brush roll. Panasonic used a couple of different types on Kenmore stuff, the bronze bushing type and small ball bearings in races. In theory, you don't need to lubricate these. Neither one of them likes dirt, or particularly, hair/thread/fishing line/dental floss/carpet fiber wound around or behind them. Getting and keeping them clean, utterly, is the best way to get unimpeded revolution. The bronze bearings shouldn't be oiled as the oil would attract dust. The little ball bearings are sealed but the seals loosen up and hair and dirt gets into them. You can carefully take the seals off, clean out the bearing with solvent, re-grease it, then reseal it. This supposes that none of the little components aren't too far gone to save. So far as I know, the bearings are not serviced separately. They want you to buy a brush roll assembly. I get enough junkers that I can salvage parts and make one out of two if necessary. I've even substituted bearings from other manufacturers in a pinch (I do lots of Kenmores).
So if your bearings are clean and turn freely, the brush roll should turn easily when reinstalled. If not, check the end caps to make sure you haven't gotten one of these cocked somehow.
Oh yes, blue flames coming out of the motor. Well, a teensy-weensy bit of yellow spark is probably normal, not visible with the lights on. The blue spark/arc easily seen I wouldn't call normal. Your brushes may be worn/bad, the commutator might be worn. It sounds like high-mileage to me. If the motor is worn, think about getting a serviceable used part rather than working with the existing one.
