520 pto clutch

the pto on my 520 has slipped, to the point of almost stopping, a couple times the last few times i used it. dad was trying to adjust it for me, when he started it was at about 1/32, he turned the adjusting nut 4 or 5 slots which got it to about 2/32 - 5/64, now when engaging the clutch it labors the engine almost to the point of killing it, once its engaged it doesnt seem to labor the engine, just while engaging it. any ideas what the issue could be? we are doing these adjustments in the tractor and the adjusting nut is threaded back far enough that half or more of the locking screw is out side of the slot if that makes sense.
 
My 70 gas did that years ago it would labor a bit because the PTO BRAKE drags a bit every time the PTO is engaged. Might be they all do it the way that system is designed. If I recall when the clutch is fully engaged is the only time the brake will release.
 
The measurement of .090 is the clearance between the pto brake and the brake disc when the pto clutch is engaged.
 
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