Lightngsvt, I have had the exact same problem. The best thing is to take it back. To properly adjust the clutch you have to open primary chain case (remove Derby cover).

From the service manual:
1. Loosen cable tension with the clutch cable adjuster to introduce a lot of play.
2. Open Derby cover and loosen Jam nut on the cluth adjuster screw.
3. Tighten adjuster screw until lightly seated, then back it out 1/2 to 1 turn (This will determine the position of the handle when clutch is enguaged). More backout=closer to grip.
4. Squeeze clutch lever a few times to set ball and ramp mechanism.
5. Tighten Jam nut.
6. Adjust the clutch cable to remove slack.
7. 1/16 to 1/8" of clack in the cable at the grip where the cable goes in (clutch cable ferrule) is ok.
8. Tighten jam nut on cable adjuster.
9. New seal on derby cover and close it back up.

FYI. Don't open the Derby cover with the bike on the Jiffy stand. Put the bike upright on a jack so the oil doesn't run out onto the floor.

Done.

 

For #3, isn't it easier to back the screw out alot and then start to tighten until you feel some resistance and then back it out 1/2 turn? After all, how do you tell the screw is lightly seated? Wasn't the screw already lightly seated? I've read that in the manual and don't understand that one so I'm asking.

 

OK, back to the dealer I guess. Should be right for $359.

 

The best adjustment is being able to pull the cable 1/16 to 1/8 out of the lever.