Turn the machine off and unplug from the wall for safety. Make sure the steam arm is cool.
Remove the frothing tube (156) from the arm, then unscrew the steam tip (135.1). This is a good opportunity to clean the steam tip with a nylon scourer and soapy water. You should then be able to remove the rubber handle (157) from the steam arm.
Take an adjustable wrench and undo the locating nut (140). One removed, take this opportunity to grab a damp cloth and clean up inside where the arm attaches to.
You then need to slide the steam arm up out of the locating nut. You may need to use a little force. In order you'll remove a black washer (138) which will be worn, then a wide nylon cup shaped fitting (136), then the steam arm with a ball at the top (135). Slide the other narrower nylon fitting (137) off the steam arm.
Discard the worn black washer and nylon cups. As per the picture, slide the narrower nylon cup back up the steam arm, then slide the steam arm back into the locating nut. Fit the wider nylon cup back into the nut as pictured, then fit the new black washer.
Screw the steam arm back into the machine but do not over tighten as you may strip the thread. Refit the steam tip and frothing tube, then you're ready to steam milk again!