Here's a cut-n-paste of the whole procedure that I laid out awhile back.
I hope that it can help you out.
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Here is a deciphering of how to properly adjust your clutch cable and clutch flower nut.
Always adjust the cable before adjusting the flower nut.
How to adjust cable:
1. Loosen the lock screw in the brass cable end until the cable can slide through it. Do not remove the brass cable end from the cable.
2. While keeping the brass cable end in the cable hole on the tip of the clutch release arm , grab a hold of the end of the cable with pliers and pull the cable through the brass cable end until the cable is tight.
3. Swing the release arm (with the brass cable end still in the tip of it) inwards towards the carburetor until it stops swinging. Do not forget to keep pulling the cable through the brass cable end as you are doing this.
4. While holding the cable relatively tight and keeping the brass cable end in hole at the tip of the release arm, and the release arm rotated fully towards the carburetor, tighten the lock screw in the brass end.
The cable strand between the cable housing stop thing on the top of the engine case and the release arm should almost be in a straight line now.
You should barely be able to wiggle it. It should not be as tight as a piano wire though.
About 1/32" freeplay.
Adjusting the clutch:
1. Adjust clutch cable so there is only a little bit of slack, about 1/32", in the inner wire when the hand lever is released all the way out.
2. Remove gear case cover from right side of engine.
3. Remove lock screw from clutch outer plate. It's the little screw that fits into the notches on the edge of the center nut (called a flower nut).
4. Squeeze in clutch hand lever until it touches the hand grip. Hold it in with the lock button or some tape or a piece of wire, zip-ty, ect.
5. While pushing in on the outer clutch plate with one hand, tighten the flower nut until snug, just using your fingertips. Do not use pliers, ect.
6. Unscrew flower nut 1/2 to 1 turn out, aligning a notch on the flower nut with the hole in the outer clutch plate that the lock screw goes into.
7. Install lock screw but don't tighten it just yet.
8. Remove tape or wire from hand lever and let it release all the way out.
9. Tighten lock screw for flower nut.
10. Adjust clutch cable if necessary to give just a little free play to the inner cable when the hand lever is all the way out. You should be able to wiggle the clutch release arm a little.
11. Install gear case cover and test ride. Every clutch is a little different.
You may have to fine tune the adjustment of the flower nut by a few notches.
