The stuck regulator would explain why it would not go but if stuck shut the air should not have got past it and out the exhaust unless that was before the passage was plugged.

Stainless would be better for the rod, at least the bit that actually goes through the gland, the longer length back to the lever can be mild steel. One easy way to tell is to put a magnet on the rod, if it won't stick then more than likely stainless though a few grades are magnetic.

That is the main route for the steam once you have opened the regulator it lets it flow down into the valve chest and then into the exposed port.

If it is being obscured by the slide valve there is quite a hgh possibility that the air is going from this hole into the cavity on teh underside of teh valve and then straight to exhaust.

Before you refit the cylinder would it be possible to post a couple of photos of the underside of the cylinder and also inside the valve chest, may be able to spot any other "unique" features that your engine may have.