John,
Someone may have set the clutch lever arm incorrectly onto the shaft. It sounds like they set it too many notches to the rear. This would have the effect of requiring the pushrod length to be too long. Sharkey wrote the following today on another posting:
"Pull the arm off the cross shaft, set it 12 o'clock straight up (if it's not already) or even one notch to the rear it'll still work."
Each notch to the rear of 12 o'clock requires the the pushrod to be lengthened. I was working on this today and noticed it is easier to get everything in place by going with more notches to the rear. That may have been what someone previously did. Now I know to start on this with Sharkey's advice. You may have to remove the bottom snap ring on the slave to get this to line up and getting the snap ring back on will not be fun. It might be best to temporarily disconnect the external return spring that you can see in your photo. And also loosen the stop bolt in your photo.
FYI, the return spring and the stop bolt seem to be used to set throw out bearing clearance. If all of this seems a little overwhelming you are not alone.
Regards, Steve