Well that sucks. Seems to be a common thing with coilovers; not performing the extra maintenance that comes along with them. This is why you often see coilovers for sale with disclaimers like cannot be adjusted for height, the dampening is stuck, etc. It's also why I shake my head when people suggest coilovers offhandedly when people make "what mods should I get" type posts. The threads, particualry near the locking nuts have to be kept relatively clean and definitely have to be lubed; not only on the outside, but all the bearings/pillow balls (if equipped) on the inside. I digress.
I'm assuming you are talking about adjusting the dampening vs the soft/hard knob? Have you tried taking the knob off? It's usually just a threaded cap basically with an allen key inside. For my BC's it's a 19mm nut/cap (as well as a 19mm nut holding it all together... If you can get it off you can try putting some PB or liquid wrench in there, and then placing an appropriately sized allen inside to try to free it. Here is a generic picture of a D2 coilover I googled. Notice below the cap itself is a nut; that purple nut should be the for the adjuster cap. It's literally just a knob with an allen key attached to it. The silver nut below it is what actually holds the assembly together. If you can't manage to break it loose, and it's actually damaged inside, the only option is a rebuild or replacement.
Note: I notice that picture has some type of scale on the knob. Not that it matters as far as adjustment is concerned but you might place a mark if you do remove the nut.