In either case, how many degrees of gap, would you say, exist between full-brake and engagement? It might not be as bad as you think, once you´re riding it....But, anyway....Muss with the hub on the stand or in hand. Is the engagement gap over 90degrees? Is the engagement gap pretty variable, meaning sometimes it hooks up pretty good, and other times, it spins free a lot before it engages? If it really is bad, the problem likely lies in the driving clutch, or the internal surface of the hubshell where the driving clutch engages. I´d tear it down again, re-clean and inspect the driving clutch, and inspect the inside of the hubshell for excessive wear. If everything looks good, i reinstall, but i wouldn´t use a lot of heavy grease on the driving clutch components. Go # 00 grease if you have it, or just rock a light coating of # 2 grease if that´s all you got. Engagement can suffer if clutch parts are overlubed; the clutch has rings and a retaining spring that help the hub transition from brake to drive....if they are drenched in heavy grease, they might have trouble hooking-up/engaging. If they´re worn, well.... finding replacement parts for Morrow hubs isn´t exactly easy....