IIRC there is an internal part that wears causing the closure problem. I found that, even brand spanking new, there's a certain knack to getting the bail to turn over automatically when winding. You are far better off turning the bail over by hand.
This, the horrible wobble, rubbish drag, plasticky construction, dismal line lay and stupidly narrow spools have pretty much put me off Daiwa reels for life. The folding handle is good though, as is the finger dab mechanism, as long as it works properly. Shame that the stem is too short for me to hold the reel (on a rod) as I prefer to without the rotor rapping my knuckles.
I still have mine as I'm not prepared to sell on something that I believe is unuseable, even when working properly. Complete junk and it staggers me that anyone buys them and that they've been in the Daiwa catalogue for getting on for thirty years.