When did you first spot this problem? The reason I ask is I ran into this on the same vintage machine during a routine service inspection a few years back. They also had a thumb and a q-attatch. The operator had never spotted the issue because he had never dropped the arm like that. I Inspected the regen valve, port releif valves, checked cyl drift, Never did fix it. Later on I talked to a kobelco service rep and he stated the larger mark 4's had this issue when the had extra weight on the boom. However there is a regneration spool inside the arm spool that can get sticky or have broken springs.