Thanks spoon, and everyone for the help so far. I figured the clutch shoes worked on inertia, as it only makes sense that way. But I do understand how they work now, thanks! I have that lightweight aluminum fly wheel with the standard, stock clutch right now ... though, my engine is in pieces at the moment

I had one question about the clutch shoes though, mine are VERY tight, is that how they are supposed to be? The racing clutch that came with my motor had shoes/springs that seem a little more loose (but they were also worn some, as they have been used).
I was thinking of just going with the standard clutch bell for now, and at a later time I could upgrade it, or possibly replace the shoes on the racing clutch that came with the engine. But is there a way to be sure the clutch bell is compatible with the fly wheel? I tried comparing them all and they seemed to be the same sizes and fit on the crank shaft. The only differences being the materials and the stiffness of the clutch shoes springs.
Update on the engine, I went ahead and sent a non-confrontational e-mail to the eBay seller of the engine. I just want to know if he actually ran the engine in its current state, and I mentioned the lack of o-rings and gaskets that I witnessed. I also ordered a gasket set, and picked up some of the engine cleaner, sealer and washers for the wheels last night. I will probably try to seal the carb tonight and then hopefully be able to get the engine together and working by this weekend once I get the gasket set in.
And would most everyone recommend the drive washer over the collet? I might try to pick up one of those (as they are cheap) if that is the case.
I will keep you all updated!