It's working now! After a long break I finally went to see the hammer again yesterday. It was somewhat warmer than previous time and also the oil probably had done its magic as well as the valve came off almost easily. I cleaned and oiled it and put it back. It rotated freely, but after I put covers back it feeled jammed again. New slightly thicker cover seals would probably help. I untightened the bolts just a bit so that it was moving again (although quite stifly).
Then it was time to test the hammer. There is no room to operate the foot pedal so I operated the rod moving the valves by hand and the owner handled the iron. There seems to be a plenty of power in it. A 12 mm (1/2") round bar was flattened with few hits.
It is leaking quite a bit of oil. Could it be because there is too much oil in the ram cylinder or does it mean that the piston rings are worn out. There was a little bit of air coming from the sides of the ram when it was down and some more when the ram was in up position.
There was no oli running through the glass pipe, so there is something wrong with oiling system, although it probably has been working earlier.
I was suprised how gently the ram is lifted/lowered at the beginning/end:
Video