Hi HondaMan!
In the photo are the two clutch baskets I have. The one with the steel band I had installed. They look identical except for the metal band. Are both these baskets from the earlier years (k2?)
Well...neither of those clutch baskets are for the K5, so I'd suggest using the one with the band on it, for the extra strength and smoothness that will bring you in the end. That one is like the K1-K4 (pre-3/74) type and is pretty universal in the early engines.
With the basket installed on the spline, I installed the inner hub.
First photo shows a ridge between the inner hub and the spline when the larger spline washer is installed between the basket and inner hub.
Could the problem be that I need to use the small spline washer?
I've attached a parts picture of the tranny: it shows the washer you're asking about. It is about 1mm thick, has a rounded side and a flat side to it, and some (most) have little splines in the center. This one goes on the shaft BEFORE the clutch basket goes in, rounded side toward the engine. The reason is: you should also have a cupped washer: it, and then the locktab, and then the fancy nut (beveled side toward engine) will lock the basket against this washer to the mainshaft. The general idea is: you want to torque the fancy nut down on the beveled (spring) washer so it holds the basket under tension against the mainshaft, but not so tight that you flatten the cup washer (that much torque can strip the mainshaft's threads!). This will position the basket relative to the clutch lifter so that the pieces will work together when you screw down the clutch cover. Lock the center nut with one of the locktabs.
Assemble the steel plates and fiber plates onto the hub (install them in the basket) and install the top spring retainer: make SURE the splines in the hub align with the splines of the pressure plate (#7 in the Clutch picture) or else you can break off the thread lugs in the presure plate when tightening the four 6mm bolts. Tighten them 1 turn each in a cross pattern while tightening them down, until they snug tight. (Hint: ensure all the steel plates have their rounded outer edge on the same side, either toward or away from the engine: Honda OEM was toward the engine, but both will work.)
Now...about the clutch lifter: the screw in the lifter arm works like this: with the cover installed (including the gasket) snugly, you can test the "reach" of the clutch lifter by adjusting that center screw in/out until you feel it hit the (assembled) clutch lifter. Here's the potential 'fly in the ointment' here: in the attached picture of the Clutch you can see that part #10 came in 2 types (notice the Parts List on the right side of the picture): this is related to whether the steel clutch plate #6 in that picture is comprised of 2 steel plates riveted together, or just one ordinary steel plate. The part #10 changes in thickness to make up the difference. I suggest using normal steel plates, omitting the fancy double-plate, as by now the rivets in the double-plate have become loose enough to cause other annoying problems that you probably don't want...BUT - if your #10 part is from a clutch that had the double-steel plate in it, and your clutch now doesn't have that plate, the center lifter might be too short by 2mm, making it almost impossilbe to adjust the lifter to reach the hub when the clutch is pulled in: you can tell if it is reaching it by adjusting the clutch lifter (on the assembled clutch cover) in/out until you feel it hit the hub (or not). Turn it CCW to extend it in toward the engine. If it makes contact, bravo, it will work: turn it until it touches the lifter, then back up 1/8 turn or so to make sure it isn't riding against it all the time. If it can't reach the lifter, then you need to find the other one in your parts collection: it will be taller (thicker) and go to the trouble of installing it instead.
When it's all fitted together right: you can adjust the clutch cable's arm with the cover tightened down on the gasket (use at least 4 screws around the cover to test things, then all of them before final adjustment) so that the end of the lifter arm moves about 0.5cm before it comes up against the clutch lifter inside. That's about right: there should be a flat washer under the nut on the arm.