Excellent trouble shooting!!
With the nut too tight, the gear on top of the advancer shaft will exert pressure on the main shaft. The teeth are supposed to engage, but there shouldn't be any 'squeezing' going on.
Dang! It's good to see problems resolved! :)
Be sure to let everyone know what you think of the ***** 225!! (i want one, i want one)
BTW, manual activation of the KIPS assy (say by rotating the nut under the LH cover) should be smooth, and it should return to detent (the spring/ball part CDave mentioned) all by itself.