ricali,
This could be your problem. Probably the fan clutch bearing rather than the clutch itself. Take a look at this thread:
http://www.peachparts.com/shopforum/showthread.php?threadid=27203
Mine does not have any slack at all, so your 1/8 inch doesn't sound normal.
BTW, I just bought a mechanics stethoscope to check these. I haven't tried it yet.