WD40 leaves a residue behind to help prevent moisture. Unfortunately, the residue can gum up the internal workings of some items and prevent them from functioning properly. I'm afraid that you are right and that the spring may be damaged. Weather this is from the WD40 or not, I don't know.
Good news though, is there is a group that repairs old toys. Their web site is
http://www.thisoldtoy.com/l_fp_set/toy-pages/900-999/995-musicboxrecordplayer.htmlToward the bottom, you can reach them by email and arrange to have this repaired through them.
As a rule of thumb, don't use WD40 if you want it to work next week too. The chemicals in it end up gumming up the inner workings. I've used WD40 as a cleaner when I need to remove rusting. When something requires light oil, a good 3-in1 oil is best.
A bit of trivia for you - WD-40 stands for Water Displacement, 40th attempt. Makes you wonder, if they would have gotten it right on the 39th attempt, they would have called it WD-39???
Good luck,
Mark