I have replaced the cord on the recoil starter however the cord will not retract after the initial pull.

Model would help. There is a coil spring that fits into a notch, as you pull the rope the spring winds around the hub. Your spring is not in the notch. http://www.youtube.com/watch?v=i3ZMVFi0yqY

You didn't install the recoil assembly correctly. They are tricky.