The Barnett friction plates are wider and you cannot install the rubber cushion rings in between the metal clutch plates. This is causing your problem. I will get the EBC clutch kit because the friction plates are same size as stock. I use three heavy duty springs and three stock. Scuffing your clutch plates may also help. I like to keep as little freeplay at the lever as possible without slippage.

 

OK, so this slippage is normal?

Will it hurt anything or casue the clutch to wear out prematurely?

Should I keep the bike in neutral as much as possible to avoid this movement?