The earliest Underwoods are considered collectible and will bring roughly $200; these usually say "Wagner Typewriter Co." on the back. Some collectors or people who want one old typewriter will enjoy an ordinary Underwood (which is likely to be a #5) if it's in great condition. Very nice #5's can bring $200 or so, but the average-condition Underwood (any model) is worth little. There are some attractive Underwood portables, particularly the "Underwood Standard Portable Typewriter" of 1919-29, with three rows of keys (the name is bigger than the typewriter). It's worth about $50. For more about Underwoods, click here .
As far as finding the offending part... For me it is hard to trace diagrams, and I have better luck just tracing the mechanisms back. Often I have to really peer with a flashlight and wiggle this or that until I determine what is linked to what. At that point, a diagram becomes more understandable. Often you will have to remove parts of the cover or case of the typewriter to really be able to see the connections. There is a good repair manual out there that covers various brands. Look for the Navy Typewriter Repair Manual. It probably won't comver your exact typewriter, but often the mechanisms within a particular brand are similar enough for the manual to be useful. Does the KMM have a margin release, and if so, have you tried pressing that to unlock the margin?