Hate to tell you this, but you may have burnt up the clutch and drum by driving the kart around the block. First, that is a dangerous thing to do unless you have a large parking lot in the middle of nowhere. Second, by driving it around the block, the clutch may not have been fully engaged, causing the heat and smoke. Is there any chance the grease from the bearing got into the clutch?
On a stand, the wheels probably always turn, that’s normal. Hold the brake pedle down and see if the engine stalls. If it doesn’t stall, the clutch is not locked up.
LAD Specialties customer / tony kart / rotax / kt100