When starting chainsaw, chain rotates when pulling starter cord and saw won't start. Take off bar and chain, saw starts on first pull, runs and accelerates fine.I have replaced the sprocket and greased the bearings. The clutch appears to be in good condition. I removed it and the clutch plate appears fine. However behind the clutch there does appear to be some "melting" of the housing of the saw.
Any ideas. It's a Poulan Pro.

Is break off?

Is break off?

Brake is off and disconnected. Lubed bearings and replaced clutch backing ring/plate. That seemed to solve the problem.