There is a large bearing in the outer pulley, I'd be fairly surprised if it failed. One the plus side, they are a bearing you can buy (I think I get one for about $30 or so). It's probably just got some crud build up inside the assembly.
Have a look around www.mr2oc.com there used to be exploded pictures from Toyota on the site last time I looked. It might just need a good clean out.
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