How do I fix a Bachman engine?

I have a Bachman Engine (#251) that is not running good at all. I took her apart and the driveshaft’s that comes out of each side of the motor are not in there tight and have a bit a lubricant on them. Is this normal or should they be in there tight so they can turn the gear assembly’s on the wheels?

I notice that Steve posted this a little later on the Model Railroader forum, which is probably what he intended to do in the first place.