Clutch & cable problems for a '82 KZ 550 A3

Are you routing the cable thru the hole in the sprocket cover? The outer cable sheath should seat into the hole. Then the end of the inner cable should be correctly installed into the clutch release mechanism - I use a new cotter pin to make sure the end stays in place.
Also, is the spring installed on the cable between the hole & clutch release mechanism.

eebbaayy sprocket cover
eebbaayy sprocket cover KZ650 w cable routing & spring
KZ550 Manual

I FINALLY finished the job up and drove my bike home today...it was a special ride.
It was 40+ miles and my first long-trip ride with this bike.

Thank you everyone for giving me tips and helping out.
Martin, your last post was the "ahhh-hhaa" moment and everything clicked together...thank you.
The job after that took only about 20 minutes.

I was rushing things and never saw the sprocket hole for the cable to go through...after seeing that it was done.
Everything made sense as to why it wasn't working.

I learned A LOT from all this trial and error and next time around I learned how important ATTENTION TO DETAIL is.

Thank you all once again.

Here's some pictures:

Glad you got it sorted! Martin's provided a few "ah hah" moments for me as well.