Oliver Super 55 PTO lever does nothing

Bought a 1955 Oliver Super 55. It runs well and looks pretty good.... but the PTO lever just flops back and forth. The PTO shaft is free with the motor shut off, but spins as if connected in the transmission when the motor is started. I know I will have to split the tractor to fix this, any ideas what I will find? Is there any harm in leaving it engaged all the time?
 
You can remove the little inspection plate (4-7/16 cap screws) underneath the tractor and take a light and look in there. My first guess would be somebody did not grease the PTO throw out bearing and it is history.
 
well i guess thats what i was referring to as something needs to stop it from spinning and that i dont believe its engaged but rather free spinning am i correct on that?
 

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