Daniel,
i had a very similar problem with my ROWE... would select the record either side of what i wanted and for the life of me i couldnt get it to select exactly where the choice was. The fault in the end was not with the rotory unit but further up the line in the actual record selector itself.. namely at the buttons. Its a real pain to work on but its path to ground was faulty. The whole key selector unit comes out.. its this that triggers the coil that stops either the letter or the number selected.
This is of course assuming that the wipers on the rotory unit are all OK..