Thanks again Grumpy, I totally understand the principal of why the "inside out" belt then leads to the clutch not dis-engaging - but thanks for confirming what was mostly a guess (and good knowledge and love of Physics, lol) for me.
I am waiting for my mechanic friend (bumped into him randomly yesterday!) to come over and help me get the machine safely on it's side or sitting up on it's rear end (whichever looks safer) so we can get decent access. hopefully I'll get some photo's then.
Even if we figure out the problem I really want to put some photos up, and whatever the solution was, as people may be interested and they may help someone else in the future.
cheers, Cranky