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I had a similar problem with my gears, ended up having like 3 bushings on one side of the sector gear, one on the spur, and 1 on the bevel. Make sure that the gears aren't getting pushed diagonally. Sometimes the gears don't fit perfectly in your gearbox, which results in the sidewalls of the gears hitting and turning the sector gear diagonally, thus causing it to lock. I'm sorry if this sounds confusing, but it's the best way i can explain it.
Do you have the gearbox screws tightened when you are doing this test?
Also check your cut off lever and make sure it's not getting in the way.
Hope this helps.
-Brett
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