Operating the lever does not cock the set trigger, pushing forward on the trigger does.
It sounds to me like someone deepened the sear notch in the hammer. That will allow the sear to swing too far forward and there will not be any clearance between the knockoff and the sear. So when the knockoff is in place, the sear won't engage the hammer and it won't stay cocked, plus the set trigger won't set.
If that is the case, you might be able to work around things, maybe by filing the sear to compensate, but that can get very tricky. Needless to say, I know of no source of parts for that gun, though they can be made at considerable expense.