Everything looks like it is sitting where it should be.
Are the headset bearings ok? they are sealed cartridge, so they should feel smooth with no play
If its the headshock, they have lots of needle bearings in them, not for the faint hearted taking them apart, headshock forks do need a special tool to service once you've got the top off.
Cost wise it shouldn't be a big bucks to service, just depends on what they find on the way, damaged seals etc.