The rules for Saboteur 2 specifically state that the Theft card does not work for a dwarf who is Trapped!. Does the Theft card work for a dwarf who is not Trapped! but who does have broken equipment?
There is no reason per the rules to suspect that Theft does not work for someone who is trapped. As one exception for Theft is explicitly listed (Trapped!), someone would need to make a compelling argument as to why broken equipment should keep Theft from working.