The clutch works a bit weirdly. The entire clutch action is in the inner "basket" assembly, the outer basket is the driven side but doesn't contribute to the clutch working except by making the driven plates turn. The plate stack is compressed between the inner basket (there is a better name for it but I can't think of it, the splined hub the steel plates key onto) and the pressure plate, the springs pull these two parts together. Assemble the unit on the engine so it's all concentric. It's good to have the drive chain on so you can put the transmission in gear and try terning the clutch with the back tire. Top gear gives you the best mechaical advantage for this.
Thus the clutch is locked up when the cover is off, but should slip freely-ish if you loosen the spring holding bolts off so the springs are all slack - turning the back wheel should cause the inner stuff to turn. If it won't lock up then something is wrong that's not allowing the pressure plate to pull in tight. If it won't slip then something is amiss with the plates, they should definitely slip with the spring tension released. They can stick together after a while under spring tension but you should be able to gently pry adjacent plates apart with a thing screwdriver through the outer basket finger gaps.
So if it locks with springs and slips without proving that the clutch pack is working OK...
problem one: will not declutch once the cover is installed.
something's missing in the throwout system. This is pretty simple - you pull the lever, cable pulls on engine lever, little widget on inside end of lever rocks against internal lever which pushes a pushrod against the clutch pack centre spider that holds the springs down: that pushes the spider in against the springs and since it's bolted down to the posts on the inner pressure plate, takes pressure off the clutch plates. The bottom of that internal lever has the clutch adjusting nuts on it.
Something is not pushing the spider in far enough. Make sure the pushrod is locating in the hole in the inner lever and in the centre spider. As far as I know there's no hidden steel ball that could go missing. The clutch plate stack may be too thick, so the spider sits too far in and out of the throwout system's range.
or
problem two: slips and will not grab once the cover is on.
Something is pushing in on the clutch spider too far. The pushrod may be hanging up on the spider or internal lever somehow? Something might be wrong making the clutch pack too thin so the spider is too far out and out of the adjustment range of the throwout system?
I'm not sure about the 550 but some engines you can see the clutch a bit through the oil filler hole with a small flashlight. It's possible to assemble the clutch off the engine and set it in the left cover, then measure from the cover face to the face where it sits on the transmission. Then you can measure from the shaft shoulder to the case face. This is good when using oddball plates but with a stock clutch you should have no issues here. I think the trouble is either in the internal lever and pushrod, or you forgot the thrust washer between the pack and the shaft shoulder.
