gfen,
I've never seen one of those brown drag pads deteriorate. Give it a shot of WD-40 and it will look like the one in the picture immediately--or at least it should.
For anyone with a Medalist that has been used extensively, at some point you should remove the ratchet bearing and ratchet, remove the pawl, remove the pawl spring, and clean the spring in WD-40 and clean out the inside of the pawl. You would be surprised how gunky that spring gets inside that little pawl. Quite a few problems with binding or chafing on the one hand, or loose turning on the other, can be resolved by doing this.
It is a bit tricky to put the ratchet back on and keep the pawl in it's proper place, but just being careful about it does the trick. Keep in mind that the bevel in the pawl has to be in the proper position in relation to which side of the ratchet it contacts (which side depends on whether you set up for LH or RH wind).
Those springs do have a way of jumping around at just the wrong time. I usually slide it on a bodkin as soon as I take it out, and roll it in a little pool of WD-40 in a plastic coffee can lid, along with the little screws and the pawl.
pcray,
yes, that is a gnarly looking spool bushing ;-)