It could be one of a couple of problems. Is there a noise coming from the clutch area when you push the pedal in? If so, it could either be a failed release (thrust) bearing or a finger (lever) bolt may have either come undone or just worn out or possibly both, this then does not allow enogh travel of the fingers to release either the main clutch or the PTO clutch.
If there is no noise and it is the PTO engagement that is the problem, there is an internal adjustment on the clutch that needs to be done. I am not sure if there is an access plate on the side of the bell housing to allow the adjustment to be done without splitting the tractor, if there is, you should be able to get a look at the thrust bearing and the fingers at the same time. The adjustment is 40 thou and there should be three bolts and lock nuts evenly spaced around the clutch unit. The only tools you will need are a couple of 13 or 14mm R & OE spanners and a feeler gauge. I am sorry I do not know if there is the access plate to see in there, but I am not 100% familiar with this model. But maybe someone else can shed some light on this for you.
