I hope this reply is timely; there is no year on the postings!
The knob on the Theo 010 telescope is for illuminating the reticle during night sightings. Turning it reflects light into the telescope tube from the circle illumination window.
The prism that joins the two opposite images of the circle is part of the micrometer optics, but as I remember it joins them after the circle selector switch, so the problem has to be located earlier in the optical chain, in the standard with the illumination window, opposite to the micrometer.
I fooled with this adjustment maybe 20 years ago and wrote up detailed notes. My notes say this is a very tricky adjustment because it affects the size of the circle image, which must match exactly with the size of the micrometer scale.
I can send detailed drawings and adjustment instructions if you want to contact me directly. It's a long document, about 660 kB.