Yes, that is a diode. The Postwar version had a rectifier disk in the base too.
When I had a 362 barrel loader with a bad disk on my layout, I just wired up an external rectifier diode.
I guess a bad diode could cause the problem you are experiencing. Do you know how to test the diode?
Last I knew, Radio Shack still carried suitable replacements. Bring the old one with you , and get one that is a similar size. That is a 3 amp, 100 PIV one. A 50 PIV one would be fine too. Here is a link to the datasheet