James:
Will it slip at all when the lever is in the disengaged position? (Can you turn the auger by hand and force the clutch it to slip at all?) I'm asking because this might be the difference between something totally hanging up and a misadjustment ..
I surfaced all the mating surfaces on my 129's PTO with fine sandpaper on a steel plate - I've seen a few posts where the clutch plates were actually surface ground in a machine shop, but I'd only go to that extreme if things were really warped ( you can check this first with a machinist's straight edge and then by using prussian blue (or a black felt marker) on the steel clutch surfaces and using the fine sandpaper on steel plate to surface them. If all of the dye goes away, the surface is flat - if there are some shiny spots and some spots still dyed, the clutch surface is warped and may need either the simple surfacing with sandpaper, or surface grinding.
You might also have a bad bearing, but you'll find that pretty quickly.
As a comment that may be considered heresy, I, in the end, had to set my screws slightly looser, I figured that either the fiber (driven) plate was a little too thick or maybe my brain was..but the PTO has been together for at least 10 years now and doesn't slip....