There's your problem.
Gears need lubricant unless they're some sort of smart self lubricating material like the recently arrived (in the RC world) Teflon, Delrin, etc. Don't think those gears are any more than run of the mill garden variety nylon. The reinforced gears (carbon/glassfibre) are even worse. They'll grind each other to death.
My suggestion is you try whatever you like first and then just go get some graphite powder from your friendly local model shop if they have model trains and such. You might find it in auto parts stores as well.
And then there's wet teflon spray, dry teflon spray, lanolene, etc.
As for gear mesh, the pinion wear suggests there's another 1mm of tooth unused there, so a lot more than just .1 shim.