Craftsman tools are notoriously hard to find replacement parts for. First thing I'd do is work out how to make a router table top. A piece of VERY FLAT ply will do. I'd do it in two layers, half inch on top, 3/4 under. Cut an opening with a jig saw to just fit whatever router plate you get as close a fit as possible. Cut a smaller hole in the 3/4 leaving a lip of about half an inch for the plate. You can buy a plate for many routers, but more on that in a minute. Kreg makes some height adjustment screws you put in the corners so you can adjust the plat so it's the height of the half inch top. I mention the table because it is SOOOOOO much safer to use than holding the router freehand. Many mounting plates come pre drilled for one of our favorites, the Bosch 1617. Buy the EVSPK kit with both fixed and plunge base. You can mount the fixed base in your table top. You move it up and down in the clamped base to get the rough height you want, and then it has a fine height adjustment to get it exactly right. The plunge base is great for freehand work.
The reason the collet is such an issue is that it works by compressing the gripping part a few thousandths of an inch to hold the bit in place. They are actually high precision devices and must be clean and dry, and they do wear out and are susceptible to damage.
In case you can't tell, I come down on the side of get a new router because I get frustrated with the old stuff. The 1617 will do everything you ask of it, it has a soft start so it is easier to control on startup, and parts and accessories abound. Old routers are only as good as the collet, and we constantly have new members trying to fine one because Craftsman doesn't stock old parts.
When you work freehand, you usually work with the finished side up. When you work on a table, you usually work with the finished side down. Router bits spin at 20,000 rpm and if it gets out of control, or the collet is no longer good, that thing flying loose is going to chew something or someone up. Building a table top you can stretch over a couple of saw horses is pretty easy if you have a jig saw, but put some painters tape over the cut line to reduce tearout on the plywood.Probably cost you five bucks in plywood, about 25 for the leveling gadget from some place that sells Kreg, or from Amazon. Here's a picture.
