I had this exact same problem on my SM-4 and it seems to be a common problem with these Olympias. The point of wear is right here on the main body:



You can see where the carriage was scraping on the case of the machine. The problem is that the rubber washers that were used to boost the machine up in its case has worn away and has been reduced near to nothing. They are located right here:



I used cork as a replacement washer and just punched a hole right through it. There's another piece of cork on the other side where a rubber washer used to be. The typewriter is held on to the main case by four screws like the one there. Just take off the back plate, unscrew the case from the typewriter, and remove. Then just put some new washers in and you're good to go. It's mildly annoying especially from a typewriter as great as this one, but it's (thankfully!) an easy fix. 

Don't keep moving the carriage until you fix this! This is a well-known problem with an easy fix. There are four rubber washers fitted between the shell and the frame (very accessible) and these have deteriorated and flattened over time so they let the mechanicals sit lower in the shell. Get replacements (like simple faucet washers) from your hardware store, loosen but don't remove all four screws and then remove and replace the washers one at a time (so it is easy to keep the screw holes in line). I'm afraid I don't remember the thickness for the washers; maybe you can judge that from the remains, or get a variety of thicklnesses, or search the web for something like "Olympia SM carriage scrape". In the end it costs about a dollar and six minutes. Thanks for preserving another Olympia!    

Here's a blog post that may be helpful - the author used "Bibb washers" from the plumbing aisle of the hardware store:
http://clickthing.blogspot.com/2011/03/amazing-floating-olympia.html

 

Lol, crazy.  I can imagine the person who did it, "Everyone lied! That just made it worse!!!"

Spazmelda, lol.