Clutch adjustmen WTF?

[FASTANDSTUPID]

I decided to check my clutch adjustment the other day, I pulled the cover and adjusted the center stud in until the little pointer on the lever shaft lined up with the case mark. I also made sure the adjuster on the hand lever was all the way in.
Then I noticed the clutch plates were released.
I had to back the adjustment stud off to get proper engagement, thus the lever shaft mark is not lined up.
Does this mean my clutch is worn out?

 

[pittboss45]

The manual tells you to unhook the clutch cable and push the arm comming out of the engine forward till it stops. While holding this arm in the most forward position, are the 2 points lined up? If not while holding the arm forward, now adjust the clutch at the pressure plate.

 

[FASTANDSTUPID]

I did do that, I adjusted it exactly the way the manual said to, the first time.
Then I noticed it feeling like it was slipping a little so I went to adjust it again and came up with what I had described in my original post.
Basically, if I adjust it the way I am supposed to, when I reattach the clutch cable it is pulling on the clutch.

 

[The Ox]

Is it possible that the cable holder is on wrong causing it to kinda shorten the length of the cable.

 

[FASTANDSTUPID]

It appears to be the original cable.
I was thinking that the clutch plates may be so worn that they were causing a problem with adjustment.