What size is your motor and prop?

I fried the motor on my 3-meter glider this fall due to over proping. And this was while running the engine intermittently.

Your symptoms sound like one or two sets of coils in the motor have burned out. Electric motors are 3-phase electric motors (that's why you have 3 wires coming off the ESC) When you burn out a coil you get the smoke from the wire insulation and the motor is now a two-phase motor with a "hole" in it, i.e. an area where there is no magnetic field being generated opposing the magnets in the motor. Coasting through this dead zone (or zones) is what is giving your motor the rough binding sensation.

I'll bet you a beer, your motor is fried and your esc is okay, although I would not recommend running your bad motor any more. Likely there is an internal short in one or more of the motor phases and this may damage the solid state circuitry in your esc. Check the manual for prop/engine size. Recommend a lighter pitch prop, but only the manual can tell you for sure. Also check for good airflow to and around the engine.