Pretty certain Schock 35 had Harken rudder bearing - look at your upper bearing for markings. It has failed due to aluminum corossion. The rudder post is SS, and the HK bearing has aluminum races. The outer bearing race, which is on the post, has corossion between the ss/alum joint, which is causing the races to distort & bind the steering. PYI has a Jefa replacement for it. Plan on (carefully) cutting the lower bearing off the shaft.
Cutlass bearing slop - you should not be able to move the shaft more than 1/8" in the bearing - if more than that, replace cutlass bearing. Carefully look at shaft going into & exiting bearing, should be dead center each end. If not, shaft alignment is out.