The picture is a little fuzzy but it looks great to me.
As mentioned rust on the shaft can make the clutch drag, but this looks pretty clean. Another thing that can happen is the clutch plate gets stuck to the flywheel or pressure plate. Then when it gets broken loose (by dragging the tractor, etc.) a piece of the clutch lining breaks off and gets wedged between the clutch disc and the flywheel. The clutch won't drive the tractor disengaged but it will spin the gears.
To live with it, start it in gear and with the tractor stopped, shift between gears quickly.
If the condition persists after adjusting and greasing the throwout bearing ( I see the zerk) you'll need to split it.
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Today's Featured Article - Tractor Profile: Allis-Chalmers WD45 (Gas Version) - by Staff. Beginning production in 1953, the WD45 had the same general look as the WD tractor which was produced earlier - but was much more powerful. This was due to the new 4-cylinder "Power Crater" gasoline engine with a 4 x 4-1/2 inch bore and stroke. Some people feel this was one of the most significant tractors offered by Allis-Chalmers in those days. Nothing in its weight or power class could match its performance. In 1954 they began offering the WD45 with the new "Snap-Coupler&quo
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