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As an experiment, take a jumper cable and clamp one end around the steering shaft before it goes into the rag joint, or on the upper side of the rag joint itself, and run the other over to the negative battery terminal or a good ground. Of course don't drive it like this, but see if the horn works with the key on. If it does, you have lost the ground rubbing block up in the column.
You have a ground problem in the steering wheel. I had a similar problem, with the horn only working with the key off but not when the key was on and it was the ground. But, I thought my cruise didn't work until the ground was fixed, although I might be wrong.
Like franklin said, check the ground. I had the exact same issue and ended up using a jumper wire from the steering shaft to the steering gear box coupler because the rag joint wouldn't properly ground the horn
I have never seen it, but they say there is a rubbing block or something that acts like a brush up in the column that gives the shaft the ground it needs, since it turns when you are steering the truck. Some of the older trucks had a jumper strap around the rag joint down at the steering box, and this lets it find a ground through the steering box.
That's what the previous poster is talking about, he made his own jumper around the rag joint with a piece of wire.
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