The neutral light is turned on by the switch that is mounted on the bottom side of the transmission, near the left side frame tube (on the bottom). As it has nothing to do with the clutch, it would seem that it is working (UNLESS, the neutral light comes ON only when you squeeze the clutch lever - if that is the case, you've got a bad diode in the wiring harness).
If the neutral light is on, engine not running, and you cannot push the bike by hand - or not easily - without squeezing the clutch lever on the handlebar, then the neutral switch is bad and it says you are in neutral when you are not.
IF neither of the above items are true, but you seem to have a hard time getting the bike to shift into first gear with the engine running, bike not moving yet-> squeeze clutch lever and bike tries to lurch forward and engine stalls, then indeed you have rusted/sticking clutch plates.
Are any of the above scenarios what you have?