Does it shift OK when not running?
Does it shift into 3rd or 4th? or are you just having trouble w/ 1st & 2nd?
How do you know the clutch is working OK?
CB500 clutches are notoriously finicky and can be tricky to dial in. I would make SURE it isn't the clutch before tearing into the motor. Remove the L side cover and make sure the actuator arm is OK. Also, there is a little rod that the actuator arm pushes, it has a tendency to snap or 'misplace' it's ball bearing.
-JP
1)Makes no difference running or not.
2) No,It does not shift into any gear.Will go down slightly to what feels like 1st,and up to what feels like maybe second only partially,but not above.It also feels like a neutral below both if that makes any cents.
3) I am quit certain the clutch is working fine,When I initially got the motor together,before I had carbs and tank ready,the disc where stuck together.I pulled them all,cleaned and re-oiled them and it appears to be working fine.
When I pull the clutch in and try to put the bike in gear,first or second,it doesn't grind until I release the clutch.Also with the bike not running,I can spin the rear tire by hand and try to click it in gear,but it still don't go all the way.
It almost feels like a false neutral below first ,
Neutral,Half of first,Neutral,Half of second.No farther.
For all I know its stuck between 4th and 5th.