When it rains it pours!
I remembered something else about the flywheel. If indeed the soft woodruff key is indeed sheared, here's a Go-Kart racers trick that will be helpful to you.
If you pull the nut and washer and indeed find the key has sheared any at all, this is probably your problem. To fix it you don't need another key as long as you have some valve grinding compound handy. In the absence of valve grinding compound, scouring powder might work.
Remove the flywheel and put some valve grinding compound on the tapered section of the shaft to which the flywheel mates. Rotate the flywheel back and forth on the compound until you don't feel the grit any longer. Add one more application of the compound and rotate it back and forth some more until, again you no longer feel the grit. Clean the shaft and flywheel thoroughly and install the flywheel with the keyway perfectly lined up and tighten the nut to 70 ft/lbs.
On the racing karts we don't use a key. We mate the flywheel as described then adjust the timing by moving the flywheel then tighten in place. If the tapered shaft is properly mated to the flywheel with the compound, it won't budge until you take it apart again, or until you hit a rock with the blade. If you do hit a rock and need to move the flywheel back in place, you won't need to scrounge up a new soft key.