'87 Hatch/tailgate won't lock

I don't have an owners manual for this '87 S-10 Blazer, so sorry if this is a stupid question. But the hatch glass / tailgate won't lock. I can put the key in the lock, but can't turn they key. I can turn the handle with or without the key in. I squirted some PB Blaster in there but still no go. The hatch and tailgate both open and close just fine, they just can't be locked.

The way the handle is made, it's pretty hard to get a grip on the key to turn it while in the middle of the handle. I assume that you're supposed to insert the key and turn the handle, and the handle will turn the key, right? So I'm thinking the thing is designed to be locked all the time and what I have is a serious malfunction.

Any ideas on how to fix this?

Thanks!!