Some dry lube and a thurough cleaning of the swivel might help things - you should use McLube Sailkote or a dry silicone lubricant. Be careful with some of the dry silicone lubricants because the can still remain a little tacky - and that's bad because it will collect sand and dust. If that doesn't work, you probably need to rebuild the swivel by replacing the bearings or simply replace it.

I don't recall what the jib halyard block looks like but it sounds like something may be bent allowing too much room beside the sheave. I seem to recall that that Hobie 18 wire block has a pin and ring that hold the assembly together. It's possible that the pin is too long leaving the assembly sloppy.