If the lever arm on the caliper is in the ON position and the wheel can be rotated then I'd say the caliper has had it I'm afraid. The cable may well be sticking / seizing from lack of use, but, from experience, it's the caliper that's at fault.
Like has been suggested, remove the cable from the caliper and get an assistant to operate the handbrake and see if it moves freely. If it does, you won't need a cable. Then, with the cable still disconnected use a pry bar or similar and operate the arm on the caliper. The chances are the wheel will still rotate and you'll need a new one.
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