I recently bought another copy of that same manual on eBay while I was looking at an IH 3414 industrial tractor with a 3120 backhoe for sale locally. It also had excessive motion in the vertical swing shaft as well as the sort of leakage you're referring to, and I wanted to get an idea of what I might be dealing with. The manual has an excellent section on rebuilding the swing unit, with instructions and photos. Well worth it.
In the end I passed on the backhoe because all the bushings and pins were too far gone. But I'm keeping my manual because I hope to find another IH backhoe for sale one of these days with the same swing mechanism.
Do a search on this site under IH 3414, or 3120, and you will find a couple other guys rebuilding these units.
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