Most likely the problem is the gears for the pump or the powervalve are not meshing properly with the crank gear.if you have the waterpump cover off still put the side cover back on and slowly rotate the water pump impeller while putting slight pressure on the cover,you should be able to feel when they mesh up properly.Or you can put the motor in gear and slowly rock the countershaft sprocket back and forth this will slowly move the clutch and crank to mesh the gears.Make sure the powervalve shaft is also engaged in the govenor assembly properly and the assembly stays mounted in the case,it sometimes likes to drop out.
Is the Shifter sitting on top of the shift drum correctly,the tips of the shift shaft should sit almost against the shift star.