slacken the cable right off loose,with the case adjuster locking screw backed off turn that big slot adjuster clockwise till it stops,dont force it when it bottoms out,then just back it off about the slots width and lock it in place,then adjust the cable,you might need to readjust the case adjuster to suit,clockwise makes the clutch release earlier,counter clockwise makes it release later.
the terms of clutch usage often get confused,when you pull the clutch lever in toward the bar you are in fact releasing/disengaing the clutch,its not grabbing and driving anymore,when you slip the clutch lever out and start riding you are in fact engaging the clutch,its grabbing and driving the shafts,confusion with releasing the lever is actually engaging the clutch,the clutch is either engaged or disengaged,phew!so releasing the clutch lever is engaging the clutch,pulling the lever is releasing it.