Well, if you feel adventurous, you may as well try to undo the grub-screw in the X-M sync dial, rotate the dial a bit and tighten the screw back to allow the sync dial to be set past the M setting. Just remeber how much have you moved it to revert the change if needed. But yes, something is not OK, and I'm not sure if this method will work. Sync and slow speed escapement are pretty nasty creatures on their own, and someone combined both right under the dials. Here Rick described how to check if the sync dial is set correctly: http://rick_oleson.tripod.com/zorkip2.gif - using PC socket, rather than lifting the top, it should not be that hard to do.
I'm sure though, that starting another thread here on APUG and asking for help with this specific issue is a better idea.
How's the lens, BTW?
(the camera didn't came from anyone knowlegable, Xmas, not from a repair shop, as any sane person would simply fix the speed dial in no time trying to sell the camera)