Re: old mercontrol throttle/shifter box and cables
That little pin is the neutral detent stop pin. Look carefully around the perimeter of the "shifter gear". You will see a small detent in one location, that is neutral position. Attached to the housing next to the "shifter gear" you should find a flat tension spring with a small hook formed in one end. The pin you mentioned installs between the tension spring hook and the shifter gear. When the shift gear lines up with the neutral detent pin, the unit is in neutral.
Hope this is clear enough.
As for the hard shifting, it could be the control box, cables or the linkages on the motor. Method of elimination is the only way to determine the culprit. Disconnect the cables from the motor and try. If better, then the motor linkages need lube. If still hard to shift, then disconnect cables from inside shifter and try again. If better, then the cables are shot and need replacing. If still hard to shift then the control box is the culprit.