Okay, thank you for your help. It took me a little while but I figured it out that the inner sleeve is supposed to rotate inside the bushing and it was frozen from no grease. I was able to remove it and clean up the rust, grease it and get it spinning freely. After torquing it to 72 lbft, it's still a bit stiff but I can easily move it up and down now. Thanks again!

Yep, you're onto it.
To post photos they unfortunately have to cone via an external provider like "Imgur" which seems to be the flavor of the day. I'm hooked on "Google Photos" but i'm too old to change lol. I just post a link using the share triangle 3 dot thingy top right which goes to create a link. Copy link & post here. That's just me though. Works for me. Till later--.

Ok thanks!

#11 thats good. Now has to run like that when clamped in the bike.

.........that long inner sleeve is supposed to go all the way to the outside of the bushings, protrude a little and be stationary with the bolt wen tight while the inside of the bushings rotate on the outside of that sleeve? 

Yes!  Exactly.  Stiff is ok and much better than the older steel clad rubber bushing design.  End caps and/or frame tabs might be deformed or worn causing clearance to tighten up.  You don't want it too loose so that swingarm can slide side sideways either. 

Also maybe use a pick or something to make darn sure no shims are there. They do get stuck sometimes.  Also grease ends of bushings and inside of end caps.

Here is link to shim.  They tend to stick inside the end cap and aren't very thick...  easy to miss unless you know they are there.
www.partzilla.com/product/yamaha/240-22127-00-00

And it is very possible you don't have any shims from the factory.

Okay, yes I looked very closely for shims because that's the first thing I thought of. There's definitely no shims in there so I think this is about as good as going to get. Thanks!

Stiff is ok and actually probably "normal". 

Not moving at all is not okay.