Your symptoms sound just like the same ones I was seeing with the '78 550K I just starting to rehab. after PO left it sitting for several yrs. Hard to hit neutral when warm unless stopped. Easy to find with engine shut down, etc. Oil level was low I first got it. Drained and filled with a combo of Quaker State & Valvoline that I had on the shelf. Still had problems. Then I found the following in a list of tips put together by HondaMan(Thanks,James!) and noted the two brands specified. Dumped the oil, refilled with straight Castrol and it shifts like a dream now. Best to err on the side of caution anyway as TT suggests re marginal parts if you're planning a long ride.
500/550 Clutch Tips
« Reply #5 on: February 15, 2006, 10:40:42 AM »
First word: GREASE! The clutch lifters on these bikes wear more because there is much more shifting going on. Grease those lifters!
We tried all kinds of clutch mods. The stock clutch would wear because of the slanted cork block faces, which were designed to let the oiled plates squish out the oil slowly and ease the engagement (part of the "smooth 4 effort" of the 500). Heavy-handed throttles then caused plate heating and warpage, making the faces engage less, then they wore quickly.
Barnett jumped in with their superior friction plates, but they were thicker, so their sets had 1 less plate pair than the Honda set. Result: same grip, less life. Even worse: the Barnett cork bits wear the oil pumps, causing low oil pressure after a while.
Solution: today, the plates are available with square-cut cork faces. Find these and use them. And, replace the steel ones, too. They're warped if you have 10,000 miles on them, believe it. Also, DON'T run Valvoline or Havoline oil. These excellent oils over-lube the plates and make them slip. Instead, use Castrol (best) or Torco (next best) oils. Castrol and Honda worked together in the 1970s to get the right blend: trust 'em.
If you're drag-racing: get the Honda slanted-cork plates and put them in backwards. Put the steel ones in backwards, too. They'll grab like a spline clutch and break the rear wheel free at the green light.