Hi Stewart,
Firstly a big warm welcome to the ODK Forums

Your issue can be a multitude of things, but as you say we'll tackled one thing at a time.
Starting the mower with the clutch engaged will have an absolutely dramatic affect.............................on your arm

, nothing else so no issues there.
Could you please take a shot of the thrust pad side of the clutch before you remove the assembly and post it here ?
As far as the cotter pin is concerned, you can't take it out until you've taken the clutch assembly off the PTO shaft of the engine, only then will it slide out as the cotter is an interference type item that acts as a wedge against the shaft.
As far as your engine is concerned it is a replacement for a Series one Scott Bonnar that you have there. Your original engine would've been a Kirby HK25.
Anyway your engine was manufacture on the 20th of May 1988. It was made in Briggs' Plant 3, their engine plant at Rolla, Missouri.
Cheers,
BB.