According to
Diagram N806, there is no connection back to the main terminals from the A side of the gravity switch (pin 4; 5 is connected to T19). So that's where I'd start probing with the multimeter. The contacts don't seem to be opening fully in the "on hook" position.
Disconnecting the microphone doesn't tell you very much. It will stop the phone from answering, since the loop current flows through the mic when the phone is off hook. If you held the dial off-normal while the phone was on-hook minus mic, it would appear engaged when dialled from a mobile phone, because the mic is shunted when the dial is turned away from its end stop. In ye olden days, the actual current to energise the selector solenoids and step the contacts around would have flowed right through your phone, and you want to minimise any unnecessary resistance in order to ensure a positive action. When you are done dialling, the contacts open and the mic is back in circuit.