Was there a lot of grooving where the clutch frictions ride in the basket and on the hub? That will cause the drag you experienced.
Sounds like you already have the gears off the basket which is a good start. Buy a new Billit basket and make sure it's one with good reviews. Since you're going through it all, might as well add a fresh inner hub, and possibly a pressure plate. Last by not least, find a pancake bearing. That should have you set for a long while I you have it adjusted correct and keep fresh oil in it.