There are 2 adjustments to the clutch. One is only for the cable itself. The other is the throw out mechanism, and is the one on the side cover (not on the cable). First, with the side cover off, the clutch should be engaged (like the lever is not being squeezed.) You can check this by putting the transmission in any gear and seeing that the the engine tries to turn when you turn the rear wheel. With the cover still off, squeeze the lever and observe it functions normally though with very little effort as you are only pulling on the throw out return spring. You can look at this function inside the cover. Also notice that when you pull in the lever, the throw out moves in and out as well as rotates. This in and out motion is what pushes the clutch plates apart, disengaging it and allowing the engine to spin without driving the transmission and hence, the rear wheel. In the center of the throw out mechanism, there is a short threaded shaft that is the adjustment for the throw out. It is needed to allow for the accumulated manufacturing tolerances of the clutch pack, the case dimensions and all the other components that make up the clutch throw out components. Take the lock nut loose, and unscrew the adjusting shaft a good ways. If the parts are crusty and the adjuster does not turn freely, take it back apart and clean everything so it does. Reinstall the side cover, and the lever should still have the same tension as before - just the return spring. Screw in the adjuster until you feel resistance. The resistance occurs when all the slack is removed from the assembly and the clutch starts to disengage. You don't want this unless you are pulling the lever, so once you feel all the slack is gone, back the adjusting screw out 1.4 to 1/2 turn and lock it in place with the lock nut. After this is done, adjust the cable. This is similar in that you want almost all the slack out of the cable, but not so tight that you have the clutch partially disengaged. You should have about 1/4" of motion at the end of the lever before you feel the strong resistance of starting disengaging the clutch.