Is the clutch lever on the engine case moving toward the small spring? If not, the cable is not tight enough, pull the cable as tightly as possible with needle nose pliers and hold it tight while you tighten the set screw. Try using your hand to push the clutch (on the engine case) toward the small spring, it should be hard to push but once pushed in the wheel should turn easily.
Tried that, pushed it all the way in by hand but the wheel still refuses to turn.