Thank you guys for your comments. This forum is great and really appreciate your help.
When I disassembled the clutch body, the cork looks pretty much intact and still attached to the clutch body. I took the clutch body to outdoor king spare parts shop last time I pick up some parts and was told the clutch was still ok.
First time I assembled it, there was no scraping sound however, the cutter is still engaged even though the clutch fork was in disengaged position. With the forums help, I then adjusted the position of the clutch against the body as basically there was no gap and adjusted the clutch thrust pad position. The clutch was working perfectly after this but then I hear this short scraping sound when shifting from disengaged to engaged.
Could it be that I positioned the clutch too far from the engine.
Attached are the latest photos:

Clutch Position Against Engine
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Disengage showing cork
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Disassembled Clutch
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Disengaged
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Engaged
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