Clutch does not engage fully and wont go to nuetral when engine is running. If engine is off, have no trouble going to neutral.

check for faulty safety micro switches on the machine
(seat ,brake ,clutch gear position -neutral etc)

So if you raise the revs to say about 4000 rpm and let the clutch out does it stall or judder or both will it engage at all and pull away ?

sounds like a failed clutch or broken transmission

Neutral safety switch on the clutch pedal may be going out. Its a $15 fix. It tells the computer if the clutch is engaged. If it goes out its like trying to start with out pushing in the clutch, wont turn over at all. Hope this helps.

On most motorcycles the shift drum has 2 levers and springs called a detents. One lever and spring(detent #1) holds the drum in nuetral and the second lever and spring(detent #2) holds the transmission in gear each time a gear is selected. The nuetral detent (detent #1) has a notch that it drops into when it is in nuetral only. If the spring for the nuetral detent is bad or the detent lever does not drop into the notch (for whatever reason) the transmission will not stay in nuetral. The detent levers and springs will be located to the outside of the shift drum, normally opposite the shift lever side of the engine and inside the engine cover.
If you can rock the bike back and forth and find nuetral with the engine off but have trouble getting nuetral with the engine running, the problem with finding nuetral is probably clutch related and is not the detent. Clutches that are not fully disengaging will make it hard to find nuetral with the engine running.

Check sticky clutch plates (if sticky put them in engine oil over night) and the clutch slave cylinder operation.

It sounds like your safety neutral switch. Put the truck in park and pull the shifter towards you and try to start it. That usually engages the neutral switch. You will need the switch replaced

The starting is controlled by neutral, clutch & side-stand switches which go to an ignition relay
If it starts in all gears except neutral but the neutral light comes on when it should then suspect a dodgy relay
For the other problem I need more info, are there ANY modifications (exhaust / air filter / carb mods)

Ride safe
Bike-Doc
Please mark this as very helpful (if it has been!!)

Lets start with the basics...
1. be sure your battery is in good shape and fully charged ( at least 12.6 volts)
2. starting procedure- ignition key to 'on', tranny in nuetral, right hand kill switch to 'run', pull clutch in fully and hit starter button.
3. does it do anything? clicks?... If you get nothing then the problem is likely in the clutch switch, kill switch, or the starter button. You will need a wiring diagram and volt meter to trace down where the power is lost. If you are getting 12 volts to the starter but its not engaging then you can suspect the starter/ solonoid.

PS... My clutch switch has been going bad for a few years now ( Im too lazy to replace such a trivial thing as a safety switch ;). Sometimes I need to hold the start button and work the clutch till the starter engages.

Shifting between neutral and first gear and back to neutral means nothing other than the slider gear dogs are lined up with first gear.

I would pull the clutch cover and see what is going on. It could be that the actuator mechanism is being held up by dirt or bad linkage. Check and see.