If there's friction between the frame and spool, then the frame is very likely bent. Either that or the spindle.
If it's the frame you should be able take care of that easily. The spindle....
As for lube, there's a few brands of special reel lube that you can purchase. Quantum Hot Sauce is one. But you can use anything that won't attract grit.
Paint it if you like. You're not going to hurt any value.