When the exterior button is pushed, the lower number 3 circuit is open but nothing there is nothing pushing against the latch. What causes the door to physically open when the exterior button is pushed? Is that what part number 2 in the diagram is for?
When you push the button (#2 on the diagram) it pushes the bracket (#7) which raises up the latch board and releases the door latch. You have to remove the outer case to find out what is broken.
Hmmm - pulled it apart and such and had it on its side. Seemed to work. put it horizontal. Still seems to work. It was number 2 as you suggested and it must have somehow become misaligned or something … ???