Sounds like you need to adjust your flower nut. If it was slipping while engaged, that would be too much grease. Basically you remove the little lock-nut, move the flower-nut a couple of notches with the clutch lever pulled all the way in. I forget which way it'll need to go, have a read through this thread.
Check Norm's 2-Stroke repair center stickies for anim's, teardown and more info on your clutch. So you can see how it all works before you go too far.
Norm's 2 stroke repair center - Bicycle Motor at Motorized Bicycle Forum