Hi Shannon,
I'm starting to think that you have a slightly flogged out clutch half as that key steel is a bit of an indication that the clutch half is moving on the output shaft and as such is no longer running true, thus catching on the clutch cone ever so slightly and enough to keep the cutter spinning but without much force. Also a worn out or melted thrust washer is a sign of an untrue running clutch. I notice there is no captive cotter pin and nut in any of your photos, is it missing or just not in the shots ?
If I am to be correct in my observations then to over come this you'll have to purchase a new clutch body of either 5/8 shaft or 3/4 shaft size,( whichever yours is) an engine output shaft key, woodruf key and thrust washer. The newer designed clutch bodies no longer have the captive cotter and alternatively have two set screws that lock onto the shaft at 90 degrees to each other, this pretty much eliminates the problems with the die cast clutch bodies of old.
Slide the old clutch body onto the shaft without the key installed and if there's any play (wobble) whatsoever, there's your problem.
Cheers,
BB.