I'm not sure what you mean by adjusting the T.O. arm back and rachetted the arm forward. There is no adjustment to mess with on the arm at the tranny. The only thing you can adjust is the length of the rod between the arm and the servo.If you moved the arm on the shaft that comes out of the top of the tranny, You screwed up. Put it back where it was if you can.  Is the servo that  the arm is connected to good ?  Are the points in the shift lever good and the wire not broken (common problem )

Can you drive the car ?   If you can, cram it into "Drive-2 and drive it around for awhile until it gets warmed up real good, all the while trying to shift gears but not enough to pull it out of gear. If the clutch disc is stuck to the pressure plate(and it could be) a lot of times it will break loose. I have done that trick a lot of times and it worked on trannys that have been sitting around for a while. Do this before you pull the engine and tranny out. Do †hi You might get lucky.
     If you have to pull the engine and the tranny out and you haven't done this before, get some help.  They are nowhere as easy as a 4 speed  to pull and you can end up tearing something up or get hurt.
     The clutch is not on the torque conv. The conv. is bolted to the engine "Flex plate and you have take 4 bolts out before taking any engine mounting bolts out . You can slip conv. off the tranny after the engine is removed. Then pull the tranny. The tranny bellhousing has to be removed to get to the clutch. YOU CAN NOT DO ANY OF  THIS with the tranny still in the car.  
      Are you sure you want to tackle this ?   This is serious work and not much fun.  If you have to replace anything you had better locate all the parts up front. That stuff is rare and costly. You can convert it to a 4 speed if you car has a clutch cable tube in the tunnel. Some did.

Thanks! Thanks! Thanks!
Spent the morning on Saturday resetting the throw out arm and vaccume actuator to the factory specs.  Disconnected the neutral start switch and drove it around in the yard for a few seconds and presto! the clutch is working again!!!  It is shifting well.  

-Even a blind hog finds an acorn sometimes....

Now for the fun stuff, Like I said it is a '72 Bug Autostick, I looked in the manual and it states that in 1970 and 1975 the autosticks were timmed at TDC (0deg).  That seems to be the case for me since there is only the one big notch on my pulley.  I lined the mark up with the split and rotated the distributor untill the mark lined up with the center of the rotor button.  I set the points as per the manual, and the thing is a beast to start...  It is acting like it is getting too much gas, Have to hold the throttle wide open and it catches up and starts. Smells like it is flooding too.  The P.O. loosened the distributor hold down so the first time I went to start it I rotated the distributor.... Any way How does one hook up an inductive timming light to this beast with the battery under the back seat?  I haven't tested the length of the leeds on my timing gun, but I don't believe that they are long enough....

I still cannot get it to idle.  I sprayed a large amount of WD-40 on the intake rubber sleeves and it didn't run any better.  I have new rubber for the intakes, but just do not want to pull them If I do not need to....

I have basically no muffler and that is my next purchase/install.  Any reccomendations about them?

I appreciate all the help...
KC

Thanks bugteck, I really appreciated the encouragement about the clutch.  My big notch on the pulley is on the inside edge right next to the engine case, not on the outside edge.  I'll check 2" or so amd see if I missed a mark, but i steel brushed the whole area to see if I missed anything, and didn't notice it.  
About the muffler, is there away to put on a new one w/o pulling the engine?
Do you have any reccomendations to manufacters?   Is it worth getting someone else to do it.  Does any one on the list do mufflers?
I also seem to have a leak (small) that I believe is comming from the push rod tube.  I haven't removed the tin to look where it is comming from, but it is in that general area.  So far it appears to have leaked about 1 drop for 5 minutes of run time....
I will post a list of what I need on the classifieds, but just wanted to say thanks.
Have a great day,
KC

Thanks again!!
Put a paint dab 2" away from my TDC mark and set the timming with the engine at the mentioned RPM.  It is idling now.  although I didn't hear a click when I pulled off the hot wire from the sylinoid on carb.  I did see a spark as I went to reattach the wire though.  I will have someone check the timing before I really start to drive it.  I'll try to source a socket for the nuts, although I have heard that they will still be a pain to remove....
The car is a little difficult at times to get into "1"  not "L" but "1".  It is like I cannot find it, about the time I was woried about it it started going in again.....I will have to get that 20 yr old oil out of the trannie before I start driving it....
Any way, I was looking at the bolts for the muffler and it loos like one of the bolt heads is already broken off.  Note I said head, I can still see the shaft of the bolt flush with the flange on the muffler mount.  

If I understood correctly, If the bolt doesn't just unscrew easily, I should pop off the head in order to save the shaft so as to get a paitr of vice grips or so on it to get more leverage?
Do I understand correctly?
I appreciate it.
KC
I plan on posting photos of the AStick tonight or tommorow.

Hey,
No, the trannie isn't grinding, it is just like the slot for the engagement of the gear wasn't there.  Then, presto, it was.....wierd.  I hope that when it has the newer oil in the crankcase and trannie, that it'll work better

Use ATF with Dextron in the Tank.    Use 80-90 standard gear lube in the tranny. You can use any good major brand.  I don't think you would need any aux. oil coolers unless you are going to jerk a big trailer around or trying to run up Pikes Peak in top gear. VW issued a bulletin along time ago to use all gears or at least Drive -2 when starting off on level ground. They were frying torque converter seals much less overheating the engine enough to blow the cly heads off or strip the crankcase cly head studs out of the case on the earler models.  This is one reason VW started to use "steel case savers" .   Your AE case has them installed from the factory.
     Do not overfill.