No, the safety can be in "fire" mode. What I found that makes it hard to reassamble is that the ejector/hold open lever creaps out of its regular position and keeps the slide from wrapping around the frame.
Key points to lube are the outer circumferance of the muzzle, the bbl. hood, the hammer face and (with the slide off) the rails that contact each other.
I also rub an oily patch or finger lightly on the sides of the frame where the slide can rub during cycling. On my stainless PPK, you can see a few little scratches. The extremely light coat of oil on the frame really helps out a lot.
I do the same (oily patch or finger) on the hammer face and tip just to make sure everything runs smoothly.