Did you take the shell off when you were lubricating it?
While lubing, I noticed that one of the piston rods has come out and it slightly bent. (See the picture) Any suggestions on how to put it back in?
(The picture in not showing up. Here is the link to it: https://www.trainboard.com/highball/index.php?media/img_8036.136697/
If not, the piston rod probably got bent before (probably during storage) and is binding, which would be the source of your troubles. Or at least a significant contributor to it.
On a real steam locomotive, that rod would be attached to the piston inside the cylinder, and steam moving the piston would turn the wheels. On your model, it's probably just a dummy and just slides in and out in a hole in the cylinder.
Is it metal or plastic? Metal can be straightened with pliers, plastic will need to be heated (boiling water on a gauze pad, or similar -- don't use anything hotter, because if you melt it, it's curtains). Hopefully you can get it back in the hole and then straighten it; otherwise, you'll have to loosen the shell to give you some play. It's a fiddly job, but do-able. Hope that helps.