Firstly Wongaga.
I think it is a crime that a company can continue to produce the same product with the same faults year after year. That is what Raymarine is doing with their tillerpilots.
I found two problems and both are related to what Wongaga has mentioned
The O-ring remains are most likely from the ring that acts as a (fairly useless) buffer when the rod reaches its maximum extent on the outward stroke. Because there is nothing to stop the ram forcing at the end of travel, this ring can eventually succumb to repeated crushing (as mine did) and be shredded.
Both ends of the area where the ram travel ends are damaged.
I dealt with the inner end ( the end where the ram is fully retracted) first.
As it was just a matter of cleaning up and making a rubber gasket.
There was a thin (1 mm) rubber buffer gasket. About the thickness of a motorcycle inner tube.
The mulched up pieces were scattered inside the housing and had become lodged in the drive rod threads.
Here is what that end looked like with the debris removed,

Here is the debris.

I almost chopped up a perfectly good tube till I thought, "Why not replace it with something else?"
So I used a piece of 6 mm neoprene.
Here it is test fitted but not trimmed.

Here it is under compression at the end of the stroke.

You can see the two parallel guide rods in the above photo. They end up being crewed into a plastic fitting with a metal (3mm aluminum) base.
At the end of the fully extended stroke that white slider pushes against the metal base. The base bends and the plastic fitting breaks. The stoke loses it parallel motion and the result is the grinding sound that I had.
Here is the bent metal base and the broken fitting.
Here is the broken plastic fitting.

I epoxied it back together but took measurements as I plan to turn this part up on the lathe from aluminum.
I will make it a bit beefier with a thin delrin bush.
QUESTION TIME.
The ram has a fitting on each end . The connector for the tiller pin and the threaded insert for the driving threaded rod. To fit a new fitting I will need to remove one of the ends. Tried a little but neither moved easily and didn't want to spoil a reasonable repair. Which end comes off?