As described on the first page, sounds like the clutch is stuck possibly due to rust. The reason it doesn't grind without the bush hog on is because there is no load or resistance on the PTO shaft when you put it into gear.
The clutch may need to be adjusted, but try this trick before doing that. Start the mower and get into some heavy grass, preferably heading downhill. Keep the engine at PTO speed. Push the clutch all the way to the floor then let it fly back out. The mower will start to slow down when you push in the clutch and the heavy grass will provide resistance to help break it loose. This isn't as hard of a shock as trying to start the mower from a dead stop, so you won't have to worry about breaking the shearbolt (hopefully). You may have to do this several times. Then try to engage the PTO with the mower stopped. If this doesn't work, then you may have to take it to a shop or look at doing the adjustments as described above.
My dad had the same problem with his 1920 and I think this solved his problem. Haven't had any issues with my 1320 thankfully. Good luck.