I think I figured out the offending piece. It's the bottom metal
assembly with the slots in it. It seems like the metal plates that
attach to the drop targets are not hitting the slots right.They are
supposed to hit against the bottom of the slot which causes the drop
targets to top out at that point. But they don't quite hit the slots
right, because the slots are worn they end up clearing the slots
altogether.

 The slots seem a bit worn so the drop targets end up going higher
then they should, causing the metal plate to jam in the back slot.

I tested the other drop assemblies in the machine and when you push
the drops all the way up the metal plate that attaches to the drop
hits the bottom of the slot on the bottom assembly and that stops the
metal plate attached to the drop assembly.

I also took apart the coil and the coil stop and coil plunger seem
fine. I pushed the rod all the way in and compared it to the other
drop assemblies and it looks like it goes up the exact same amount.

So either those slots are a bit worn. Or the coil stop or coil plunger
are worn so the coil pushes the targets to high.

When you push up the drop targets, ALL of the metal attaching rods go
up to far. That is a BIG clue. So sometimes other targets are getting
stuck as well. Not just one...

I took some more pics here:
http://www.flickr.com/photos/tomdotcom88/sets/72157622995642512/