Test indicators are also called "dial test indicators" and "lever type" indicators and sometimes are given the abbreviation DTI. They're small and the gears, pinions and bearings are even smaller. That's why they're the most fragile of the mechanical instruments, the most easily damaged, and among the hardest to repair. Special tools and considerable practice are usually required.
Here are some of the things that are likely to go wrong, how you can prevent it, and what you can do when it happens.
The crystal is the clear plastic lens through which you can see the dial and the hand. Several things can happen. The crystal will become cloudy or discolored with extreme age or solvents you're using in the shop. The solvents could be airborne mist. The crystal can fall out on its own and this happens when the plastic shrinks. This can be due to temperature fluctuations or age of the plastic. The crystal can also fall out when the bezel is damaged. The bezel is the metal or plastic rim around the face of the indicator. In most cases, the plastic crystal is inserted into the bezel with a press. It will snap into place in a groove and because the plastic is now dome shaped it will remain firmly seated. Some manufacturers now use one-piece plastic bezels with crystals. This makes the job of replacing a damaged crystal a snap. Literally. Just snap the new one in place. However, it also means that you will be able to break the plastic bezel with ease. More on that later.
The crystal can crack from mechanical damage but it can also show stress fractures, tiny cracks which may only show up from certain angles or under certain light conditions. These are most often associated with Compac indicators, even when brand new.
When the crystal is no longer properly seated in the bezel, several things can happen: fluids like oil or coolants will leak under the crystal, may discolor the dial or dissolve the numbers on the face. It will also leak underneath the dial and that's where the hair spring lies. If the hair spring becomes oily, it will no longer function and the indicator won't repeat.
The dials are plastic or painted metal with the numbers and tick marks (graduations) printed on them. Some dials hold up better than others. The numbers can fade with time or because they're washed out by solvents or exposure to extreme light. Dirt and oil can make dials unreadable. If you can remove the bezel and crystal you can use a tissue to wipe the dial, but if you need to replace the dial, then you'll have to remove the hand (or hands) and that needs tools and experience.
The hands (pointers) are preset at different locations on different models. The exact location is really arbitrary and, over the years, various manufacturers have changed their minds on the hand's starting position. Mitutoyo has made it easy—presumably for their own assembly line—by printing a tick mark along the outer edge of the inner dial. When assembling the indicator, the large hand should line up with this tick mark. More significantly, the large hand and the small hand, if there is one, should both coincide to reduce the possibility of reading errors.
Coolants and oils can also leak into the movement from the contact point end. There's no way around this. The body has to have an opening at this point so that the lever can move. Small amounts of fluid may not cause immediate harm, but they will eventually work their way towards the hair spring and then you'll have to have the indicator cleaned. Don't try to immerse the indicator in solvents. It won't work. The indicator has to be disassembled and the hair spring has to be cleaned and dried. Disassembly is complex. Just opening the side of the body won't give you access to the hair spring. You will have to remove the dial assembly and unless you know what you're doing, you'll probably do more harm than good.
In some indicators, the cover on the side of the body can be removed without it affecting the indicator one bit. The Bestest indicators are a prime example. Learning from the watch manufacturers, they've adopted the mono-bloc movement which is independent of the body. In theory, you can open the case, remove the old movement and drop in a new one. In theory. Most other indicators stop working the moment you open the case. And, you'll probably never get them to work again.