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My money is on multiple causes to these issues.

Do you have a Factory Service Manual?

 

I have a Cylmer manual (pic attached). Not sure if that is what you're referring to or another, more detailed manual that I sometimes hear about?

 

#1 the neutral switch is wired in parallel to the clutch safety switch and a short or positional problem in either circuit Or incorrect wiring may be allowing the starter motor circuit to complete......Some neutral switches REQUIRE a very specific washer under them or give false readings......
#2 Dirty, weak, or worn connection @ starter button switch, weak internal solenoid connection, weak battery, loose wire connections, dirty starter motor commutator or brushes........
#3 This is normal as the transmission shafts have to be rotating unless the dogs on the slider gears are momentarily perfectly aligned......OR, could be sticking/mis-adjusted clutch to NOT remove pressure from gears.......

 

#1 i assume the "clutch safety switch" is the switch protruding on top / right side of the engine case. Yes, I believe that switch is suppost to tell the bike when its in neutral. I don't think that switch is working anymore & I cannot find a replacement for it. So if that switch is faulty, then I believe what you are saying makes sense since that both work in parallel.

#2 guess i will pull off that button switch to check connections...then move on to the other options you listed

#3 will installing new clutch plates address, or that wont fix at all?

 

That is not a Factory Service Manual.

Could someone help with that?
PM me too, I haven't known the library login and pw for ages.
Thanks!

 

The switch you mention is the neutral and 6th gear switch, 2 functions and 2 separate wires. The circuit you are working with is Light Green w/Red tracer.
1st make sure the switch is connected properly. If so then disconnect and use you VOM to check for resistance on that wire to the switch with the transmission in neutral. The switch should have zero resistance but you may see an ohm or two because of the oil inside the switch making a sort of bad connection. While you're testing the switch check the other wire for zero resistance after shifting the transmission up into 6th gear.
If the switch tests good, I doubt it will, then that means the wire has found a ground or the PO tapped into the wire and grounded it.
The clutch plates have nothing to do with this problem. The switch is activated by the shift drum.