Hi Brendan,
Sorry but I feel you may be misunderstanding the terminology. The Clutch body is the major circular part that we can see, the part that moves in and out is the clutch cone.
Now what I was asking is when you pull the starter the outer body should rotate while the cone should be standing still and this is with the lever in the leaning over position. Now while you are pulling the starter slowly is the body rotating absolutely straight or is there a bit of left and right wobble happening. Once you've given me the answer to that I can continue your assessment and we'll get to the bottom of the issue.
As far as the bed knife is concerned, please never attempt to remove the bed knife yourself, rather you remove the complete sole plate assembly and the reel and take them to your nominated machine shop and they have the correct equipment to do the removal of the bottom blade and reinstall a new one. Then it has to be machined at the same time as your reel so that they match. You can not just buy a blade and put it on unmachined.
Cheers,
BB