When you say the "whole assembly", are you saying the inner tube is rotating against the rack arm, or the light mount is rotating against the inner tube?

I've not had great luck with using inner tubes for those kind of applications. It seems they have some kind of powder inside that makes them kind of slippery even after they are washed off. The only time I have had luck was by wrapping quiite a bit of electrical tape around the inner tube.

It may be there's just too much of a thickness to work correctly. Doesn't it mount to the back of the rack?