09-06-13, 08:41 PM
I'd start with adjusting the cable. Biting from 1 inch out doesn't seem like enough to fully disengage. Had similar symptoms a while ago with 1st and 2nd at low speeds, and struggled to find neutral. Adjusting the cable did the trick. Can't comment on coasting with clutch in but it sounds consistent with the theory.
Nothing is foolproof to a sufficiently talented fool.