I'm wondering of the PTO bearing might have seized up? I myself would look at taking it completely apart and checking everything out. Yeah I know a PITA but the best way to trouble shoot it and just go ahead and put a new rebuild kit in it along with a new bearing. When the handle is back it should stop turning and you should be able to turn the pto with your hand when the motor is stopped with the handle in the rear position.
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DWayne
1973: 128, ag tires, 3pt. lift, spring assist, lights, 42" Deck
10" moldboard plow
2016 XT1 42" deck 18HP
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