^ Sounds to me like its not enguaging fully (still grabs with clutch pulled in) and not enough tension on the lever. Did you try adjusting it where the cable is held on just below jug on right side of motor? There should be two nuts there, each on opposite sides. Turn the back one out, and tighten the front one, and you should be good to go. Let me know if this fixes the problem. Good Luck!
THE 80's RAGE! Currently owns:
81, 85 Yamaha Tri Moto 125
83 Yamaha Tri Moto 200 x2
82,83 Yamaha Tri Moto 175 project
85 Yamaha Tri Z 250
84 Kawasaki Tecate 250
84 Honda ATC 70
85 Honda ATC 350X
84 Honda ATC 250R
(2) 84 Honda ATC 200x
82, 83 Honda ATC 185s
81 ATC 200
Lots of other parts and bikes