[Chris Garrett]

Is this the correct setup of the adjuster? Should the little arm be seated all the way down at this point? When I depress the clutch lever, there is very little resistance. Is that little spring all that provides the pull back on the lever? :?:

 

[tbpmusic]

That looks good, Chris.
This is assuming that the adjuster is seated all the back in the sleeve.

Now put the cover back on the bike and pull in the clutch lever - adjust the big screwdriver slot thing, and you'll feel it pull the clutch lever back out. Leave a little slack in it and tighten down the lock nut.
That should do it.

It's the clutch springs, acting through the long push rod that provides most of the return force.
the small spring there just keeps things from flopping around - it's dangerously close to the counter sprocket.

 

[66Sprint]

You ARE missing the forked keeper "foot" and its bolt in your pic..... Hard to keep the adjustment that way......
And double check for the loose ball bearing in the "pocket"...................

 

[Chris Garrett]

You ARE missing the forked keeper "foot" and its bolt in your pic..... Hard to keep the adjustment that way......
And double check for the loose ball bearing in the "pocket"...................

Thanks. I have the ball bearing and the fork.