Pulled the whole shooting match apart today and didn't really find anything, BUT..I seem to have clutch operation now.
I drained the oil and pulled the basket. The discs are like new. They, along with the springs, measure within spec. There were a few discs/plates that were stuck together, but nothing I couldn't pry apart with my fingernail.
Reassembled the left side cover but left the right side open so we could watch the basket move. Went through the adjustment sequence several times and eventually got the right combination of lever/cable adjustment to make everything work.
I'm sure I'll have to fine tune it once the bike is running but, as of now, I'm calling it good to go!