Wow, it must be that time of the month for blowing shocks. I also have an MC3.3 that blew on me a couple of days ago. I bought it on ebay as a new takeoff from a Trek Fuel. Rode it for about 5 months, and then a couple of days ago during a ride it abruptly went from working properly and silently one minute to all of a sudden wheezing and blowing through the first 1 cm of travel like nothing. A few minutes later lockout stopped working, and the wheezing sound increased (I think this is called "cavitation"). Also, I noticed that when I compressed the rear end on my bike, the damper shaft didn't move inside the air can in a straight line, it looked a little bent.
Anyway, when I tried to let all the air out of the can, it sprayed oil at me, which is weird because there should not be more than a drop or two in the air can. I removed the shock from the bike, let the rest of the air out and then compressed it a few times. It compressed normally once, then on the next compression I felt the shock stiffen suddenly and "kick" back up. This felt to me like the compressed nitrogen inside the gas leaked out of the damper into the main air chamber (probably taking some oil with it). Sure enough, when I checked the air can valve again, more air and oil sprayed out. I then removed the air can and a lot of oil leaked out, maybe 30 ml. So yeah, the damper is toast and needs to be replaced.
BTW, here's a great link to explain how these shocks work if you plan to take it apart. http://www.krankin.co.nz/_sgg/m6m9s1_1.htm
Here's what you should expect from lockout, floodgate and full open settings on your shock. In the locked out setting the shock should not give more than a few mm. In the floodgate setting, depending on the position of the gold floodgate ring, it should not compress when light force is applied, and should compress with moderate compression damping when no resistance is applied. In the unlocked setting, the shock should feel fully active, like a normal spring with little damping. Try checking these things with the rebound set fully open, as fast as possible. If it makes any wheezing noises, or you feel a knock from the first 1cm of travel, there's a problem with the damper. You can check for oil leaks inside the air can but letting all the air out and simply unscrewing the air can by hand.
This video will show you how to get the air can off:
Although the Monarch shocks are very similar, they have a damper that can be easily broken down and the seals and oil replaced, and even the air refilled. You will not be able to service the MC3.3 damper as it is not user-serviceable (according to the SRAM tech manual), so the above video is mostly useless.
I took my busted shock to a nearby shop and their tech advised that if I send it to Rock Shox they will actually send it to some other place to have them work on it, like Hippietech or PUSH. I find this a little strange since both of these shops are essentially a one-man operation and there is now way they do all of RS's work.
The Rock Shox service number is 1-312-664-8800. I would start there, but give push a call too and see if they can't do the same job cheaper or better.
Sorry for epic post, hope I was able to help.