"What could be the problem and where to look next?"
Agree with Brendon-KS that "the problem could be the relief valve".
Take a look at the TOUCH-O-MATIC CHECK VALVE HOUSING ASSEMBLY diagram below.
Note the Relief Valve (Key 9).
Also note the Lock Screw (Key 6), Adjusting Screw (Key 4), and Spring (Key 7),
Take a look at the Touch-O-Matic Relief Valve Operation illustration below.
Note the relief valve 19 is open open allowing oil to return to the reservoir.
The relief valve must be closed in order for the drawbar arms to raise.
You might consider reviewing the Adjust Pressure of Touch-O-Matic System topic on page 180-15-13 in the service manual.
Removing the lock screw and turning the adjusting screw in (clockwise) will tighten the spring tension on the relief valve, but please read the above mentioned topic first.
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Today's Featured Article - What Oil Should I Use? - by Francis Robinson. I keep seein this question pop up over and over again in discussion groups all over the web. As with many things there are often several right answers and a few wrong ones. Some purist I'm sure will disagree to no end with what I will tell you but most of us out here in the real world don't really care do we ? Some of them only bring their noses down out of the air long enough to look down them anyway. If you are like me you are only doing this old tractor stuff because you enjoy it. You
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