I downloaded your model and ran it. I didn't quite follow your explanation, but there are some improvements you can make to the model.
These two issues are tied together - you have motion actuation on the Cartesian Joint which has no inertia associated with it.
- Eliminate the algebraic loops
- Do not motion actuate a joint that has no inertia associated with it
I think you are trying to place a camera that will follow the rocket using the Cartesian Joint.
As for the other points you raised, I see the rocket spinning as you expected it to, and not oscillating. If you can add some plots and an animation to explain what is different than what you expected, we can help further.