Why pump the shaft dry?
If steel is used for the weight then buoyancy would only reduce it by about 13%.
Viscous damping would be greater of course, but the thing would be moving quite slowly and I imagine it would not be a close fit.
Come to that, why not have several (on guide wires fixed to the sea bed) dangling below a vessel in a nice deep Norwegian fjord, or even the deepest part of the N sea (up to 600m I think). I believe nowadays they can keep vessels very accurately in the desired place using satellites and thrusters?
The supply cable would need looking after of course.
On a more practical level, I struggle to understand how the generation side would be controlled:
with the mass falling at a steady speed and generating electrical power, if the electrical load is increased (say by switching another street onto it) then the mass would need to fall faster to meet demand, but in fact the reverse would happen.
Somebody please tell me where I am going wrong.