[Ken Bergen]

okay this is the third time l have attempted to post this. took the cover off and the driveshaft is turning when the bike goes forward. stiil does not pull down or die when put in third gear and holding the brakes. as a matter of fact it runs at about 550 rpm and increases to the normal 750 when you engage the clutch

You've narrowed it down to the rear of the drive shaft or the rear differential/axle, not the clutch.