Ok,
This is all very embarrassing.
99% sure that I have figured it out. If there is ever an award for idiot mechanical mistake then it has to go to me. There are 3 screws to hold on the shroud. See below:
[photo="large"]3739[/photo]
One of the screws is larger than the other 2. I guess you are supposed to use this screw on the PTO side. You should NEVER EVER use this screw at the fixing point on the flywheel side, toward the front. If you do you find that because it's longer it goes all the way through to the flywheel and typically jams in between 2 flywheel vanes acting as a very nice CRANKSHAFT stop. After lots of taking off new clutch / putting on old clutch / replacing the shroud etc. I noticed a weird tingy noise (the screw thread scraping against the flywheel vane!) then I thought "that's odd" and checked the crank and it was locked. Then I took off the shroud and it was unlocked.
The reason why I got a couple of degrees movement when locked should be clear now! And the reason why I thought that pulling the plug (and hence the hydro lock theory) was the deal was because I usually find it easier to get the plug out this way!
I suppose that the lesson is whenever you have screws of varying lengths - question why! Anyway sorry to waste everyone's time - but hopefully the story does have some amusement value.
Thanks again for your patience and help, as usual...
