I (and no doubt loads of other ipaq owners) have had the same problem. The best fix should be to either take it back to the shop where you bought it or send it off to Compaq to get the stylus lock repaired.
If you don't want to do this however you could try cutting a notch in it where the normal one is making it larger.
Or you could try [url]www,pocketpctechs.com[/url], who do repairs of all sorts of ipaq related problems, dust under screen, battery problems and the stylus lock replaced.