The problem may be internal all right, but perhaps only within the cable itself. Those clutch cables use several thin steel wires braided together into one large wire. With age and normal use, the inner wire can start to pop, one strand at a time, until it either breaks or comes apart to the point that it just stretches and can't exert any pull on the clutch arm.
I'd do this: Unhook the clutch cable from its anchor on the clutch actuator arm, and tie it up out of the way. Then, raise the back end of your Blaster off the ground. Chock the front wheels. Start the engine, and use a pair of Channel-Lock pliers to manually pull in the clutch lever, mimicking the normal travel of the cable. With the engine idling in 1st gear, the clutch should disengage when you 'pull in' the clutch arm with the pliers. If it does, and the rear wheels stop turning, you've just got a problem with the clutch cable.
In the event that the clutch does not release, you'll have to take off the RH engine side cover to investigate further. The good news is, either way things turn out, you WILL NOT have to split the engine case halves. Hope this helps! I:I
BTW, Project Blaster now offers a Magura hydraulic clutch kit for the Blaster, which does away with the whole cable-operated system. If you've got about $ 250.00 on hand, it is a great upgrade...
