Or some part of the lock is jammed and is not pushing into the axis. Often what will happen is either the position of the lock shaft moves, so it reaches a limit before enough friction is applied to the axis.

As you turn the knob the oblong end pushes on a pin or some sort of friction device that is attached to the axis. It's an rotating shaft with an side ways egg shape at the end. The lock on almost any Digital Theodolite or non-robotic total staton is very similar.

In order to realign the signals, a standalone power supply is needed, as well as a digital oscilloscope and Topcon tolling, called 'illuminators'. Unfortunately, if that doesn't solve the problem the signals are going to have to be realigned, and parts may have to be replaced. I would also remove the battery and external power for a few minutes before I turned it back on. The user manual says to turn the unit off and back on, to see if it was just a momentary glitch. I've seen a number of them where the circle was intact, however no longer attached to the axis shaft it is supposed to be permanently fixed to. If there is a problem with the readings of the circle then values have been lost telling the circuits how to read that exact circle properly, or something has become damaged. The grade system uses an etched glass circle, the same as a digital Theodolite or total station uses, to measure it's grade. ERROR 03 is a grade circle reading error.

Nikon ne20s owners manual