Thanks Yngmar. So, the bit that is showing friction is on the DRIVEN side of the unit, the side on the right in the below photograph, which is driven by the pancake motor:
Hence it will only show that friction when the drives engaged.
That electromagnet should never, ever touch the wear plate, correct? As all its job is to do, is draw the wear plate on the LEFT towards it to engage the clutch. Wear in the bearings (and the fact none of it is screwed together properly!!) could account for how it's now rubbing, causing that friction, making that grinding noise and drawing more current, as its having to drag itself around the electro compass that does not rotate?! Hence Geoff's solution of freeing it, but rubbing it down where it looked like it was making contact should work...?
Electro Magnet:
Back of the DRIVEN wear plate:
And indeed, should the base of the electromagnet, be greased? It is dry at present.