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Does this look broken to you? Took it to a bike shop and they said the arm shouldn't rest in that position, it should be around 90degrees more to the side in a resting position.
Bought this second hand and spent a nightmare of a weekend trying to fit it. Over shortening a change, breaking a chain splitter and getting replacement gear cables in the process........ should have just bought a new one instead of a second hand one.

By "arm", you mean the plates holding the jockey wheels, right ?
Is there still any spring resistance when you rotate it ?
I haven't dismantled a recent model mech but it may just be that the spring has jumped out of its proper hole and needs fitting back in. Not massively easy to achieve but not that hard; I bet there are videos or something like parktools instructions for it.
Yes what's holding the jockey wheels, there is spring resistance and a slight click as I get to where it seems like it should sit normally. I can pull it all the way up towards the cable tension point but the sprint gets very tight.
There's not an obvious way to do maintenance on the mechanism holding the arm.
Yeah, the bottom jockey wheel should be near the cable clamp, probably closer to 180 degrees out than 90!
In the middle of the picture you can see a metal pin, on the other side there's a hanger which stops it getting all the way to 180. I suspect the pin should be on the other side of the hanger. No idea how it would end up on the wrong side though without taking it apart.
Actually that's wrong the hanger just stops it going past 180. Something else should be keeping the arm further up

take a look at this and see if it explains any of what you're seeing:
https://www.parktool.com/blog/repair-help/rear-derailleur-overhaul
The arm should never stop in that position. It should be as per picture posted above.
I'd say that is broken!
There's a torsion spring in the pivot for the cage, it's either broken, or it's found it's way out of the locating hole in the cage, it *might* be repairable, but it's more than likely borked...
Did you actually buy it like that OP?
Actually, watch this:
That video is exactly the issue.
Thanks for everyones help. I bought it second hand like this and the seller confirmed they refurbished it beforehand and must have put it back in the wrong position.
Ended up just buying a new one and I'm hoping I can return this one, even if it is potentially repairable by someone who knows what they're doing. Had a nightmare of a weekend trying to get this to work. On the plus side I've learnt loads about how front and rear derailleurs work.