Joe,
I had one of these, the clutch was dodgy, but I still wish I hadn't sold it!
The clutch was a very crude expanding shoe and was basically just a ring of metal with a wedge cut out of the top. As you operated the handle, a rod was driven down the centre of the rotating drive shaft (the rod spins with the shaft, there is a bearing in the handle if I recall correct)
This rod has a ramp cut in to it, and a dowel pin rides up this ramp, and pushes the wedge in to the cut out in the clutch, expanding it.
My rod was obviously not sufficiently hardened or was damaged by improper adjustment or use, so the ramp had a notch, and this notch made it very difficult to actuate the cluch, all I needed was a bit of medium carbon steel the correct length, and machine this simple ramp in it, I'd case harden the ramp locally and that would have sorted it.
Failing that, making an entirely new shoe wouldn't be difficult as it didn't have any sort of friction material on it. You could also sleeve the corresponding bore in the pulley?
As Niko said, worst case scenario, do away with the clutch, the ML7 version doesn't have one, and you don't really need it. It does prevent you having to stop and start your motor all the time, to quickly check dimensions which is handy, plus as I understand it, stopping and starting can be very harmful to most single phase motors depending on the type!