Friction is one of the contributing reasons why it will not work well, bit there is a fundamental reason it won't work:

When you introduce the ball from the air side to the water side, the ball must displace an amount of water equal to its volume to enter the water column. Resistance to the ball entering the water column is a distributed pressure on the balls surface which increases with the water depth. Ergo, even if it was an ENTIRELY lossless joint between the air side and the water side, it would take the same amount of work to force the ball into the water, because it would be the differential in pressure from the air side to the water side, and the density differential (which is the underpinning false prime mover) is taken up by the work required to force the volume of the ball from the air side to the water side. If there was no friction in the system, and all of the balls, chain, and gears were massless, the system simply would move on its own and have no resistance to moving. If the balls had mass, it would take work to move it. Everything gets worse from there