Ok... I tried out the new steel spur set and racing clutch and here is what happened. By the way, I went with the silver springs with the set screws on the aluminum clutch shoes.
And to rule out settings. The mesh was wonderful and I did reassemble the clutch and clutch bell as it should be. So that leaves me where I am now. Asking why this could of happened and how can I solve the issue.

After I ended up losing a pin for my front upper arm and had to stop for the day, I noticed a deep groove in my brand new spur set....


I was a bit worried that this just wasn't right. hmmm.

So I got home and tore it apart for cleaning and inspection when I took off the engine to check out the problem, I noticed that the brass washer was wedged against the screw.


After trying to unscrew the screw and realizing that it was only starting to strip my threads, I then stopped to try to move the washer but it wouldn't budge. I used a socket and knocked it down with a small tap with the hammer. WOW what a groove in the washer.


I then noticed on my drive shaft where the washer was riding, there was a small groove in the top of the shaft.


I guess my questions are.

1. How could of this happened, when all was put together right and proper meshing?
2. What can I do to fix this and keeping it from happening again?
3. Is that groove in the drive shaft going to affect anything?

Thank you in Advance.

Phoenix_stu