Your knee controller looks the same as the carbon pile rheostat in my foot controller. I just Googled this, and nowhere is there any mention of greasing it. You said Singer recommended you "lubricate" not grease, so I'd assume they meant oil and, well, I wouldn't apply anything at all to the contacts unless there's an obvious need for it.
http://needlebar.org/nbwiki/index.ph...ing_a_Rheostat has more information about these devices.
EDIT: I'm quite sure we don't *all* have them. They're not as popular as, say, the 66 or 201