I had this exact same problem.
There is a nylon bushing inside the wheel 'hub' that has slid
out of place. It acts as the bearing between the wheel rim and
the axel.

Prop that side of the blower up and pull the wheel right off. (Mine
had a star shapped clip I had to pry off with a screwdriver
before I could get the wheel off.)
The nylon tube may stay on the axel shaft or you may have to
push it out of the wheel.

Put the bushing back in the wheel, aligning the holes and drop the
pin in so they stay ligned up. Put the wheel back on the axel
untill the pin hits. Pull the pin almost all the way out and put the
wheel on. You want the pin through one half of the wheel and
and one half of the bushing so the holes stay lined up or you'll
be pulling the wheel off again.

The wheel slides on and off real easy. I did this on a
Sears 536.887752.. There are no bearings or other pieces
that could fall out. I see this as a design flaw and I leave the wheel
locked all the time.

Good Luck