Help clutch will not Disengage! Rm125
 

Okay, so I recently received a 1992 suzuki rm 125 for free. It was thought to be a lost cause since it was chained to a tree for 20+ years, maybe more. (Not to sure how long all I know is that the tree grew into the bike and around the chain) but anyways I took it apart and fixed it up and it turned over and ran. Sounded great too. Put the chain on it and started it up in neutral, ran it for about 30 seconds. whiling holding the clutch in (as well as the brake (for safety reasons)) I put it into first gear and it instantly started doing a burnout. This is my first bike so I have no idea what's going on. I know it's not the basket because I have filed them smooth. Has new fibers and steels. I have ruled out the cable because I went straight to the case and try doing the clutch with some vice grips and it won't disengage that way either. Everything looks fine inside so I'm at a lose for what it could be. Any ideas?