I see you mention that the pinion normally grinds and then goes into gear when you pull the lever up, does your pinion Brake not work? If you pull the pinion clutch lever to the rear it should stop the pinion from turning (and grinding the teeth off). All that grinding could have caused the problem that you're dealing with now.
'46 Willys CJ2A Farm Jeep, '49 International KB-7, '31 Allis Chalmers U, Cushman Scooter(s)
Antique garden tractors & outboard motors
Other rusty old junk comes & goes without warning.
The 2 most useful tools to have in your shop are a Crystal Ball and a Magic Wand