When you loosen the body a half turn, the flashlight operates in momentary mode. When I do that on my SP, a light press on the piston (don't push it all the way until it stops) turns the light on and as soon as I release the piston, it turns off.
When new, my piston's O-ring was very tight and I got a real workout trying to "click" the piston. If the piston moves too slow, you'll enter lockout mode instead of turning the light on. 3 clicks turns the light back on which might explain what you are seeing.
Now, to check if it's just the O-ring that is causing the problem, simply pull the piston out as you did when you cleaned all the *gunk* off of it and carefully remove the O-ring. Now place the piston back into the light (with no O-ring) and see if you can make it operate properly. Remember to use *clicks or taps* to turn on and off, "press and hold" will enter lockout while off or change light level if already on. If it now works correctly, move on to solving the tight O-ring issue. If it still does not operate correctly, the problem is somewhere else.
To fix mine, and this was ONLY after I had determined that the light was working correctly, was to do all the steps listed above and then to sand down the o-ring to make it slide easier. It works a treat now. I simply removed the O-ring from the piston, being very careful not to cut it or tear it. Then I chucked the body of an old Bic pen I had that was just the right size to slip the O-ring onto into a hand drill and then turned on the drill and held a piece of sand paper to the outside of the o-ring for a few seconds at a time until I saw a small flat section develop. Then I placed the O-ring back on the piston, lubed it lightly and put it back in the light and it works much smoother and easier. Sanding creates little scratches in the flat spot on the o-ring that can hold slight amounts of lube which eliminates stiction, even if the light sits for days. Before, if I let the light sit on the desk overnight, by the morning it was very stiff to operate until I'd clicked it near a dozen times.
Just to recap and sorry for my longwindedness.... I never know when to stop typing... To operate the light, you must quickly *click* the piston, not press and release... press and release will either do nothing, or may put you in lockout mode. I found that two longish clicks would also put me in lockout, but quick taps on the piston work every time.
Hope this helps.
Regards
Christian
PS: Don't try to sand the O-ring while it's on the piston.... you WILL sand the piston as well, if you do that. Just use a dowel or pencil or whatever you have laying around that is the right size, put it in a drill, push on the O-ring and do it that way.