Re:
The rebound cap is on the top. I've had a few of these forks and they are amazing. If you look at the bottom of the top cap you should notice the recess for the adjuster rod isn't perfectly round. The top of the rod also isn't round, they fit together and the cap rotates the rod when turned. I would guess you tightened the cap without fully seating it on the rod.
I have had 2 of these forks. The first I bought new, still have it, still rocks. The second I bought used through an auction. The second fork came with the wrong rebound cart, didn't work or fit the cap like the original. Something pulled out of who knows what, but that what must have ridden like crap. Bought one of the few remaining original carts from marzocchi a few years ago and all has been good since. Ridden quite hard and hasn't missed a beat.
Hopefully once you fully seat the cap it'll work like new!
PS, don't add to much air. 10 psi is overkill. Think 5 max.