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B&S 3.5hp mower, pull start won't rewind, that is until?

I undo the cowling bolts and lift it all up about an inch and suddenly the spring winds it up as it usually would.

The problem began while mowing, made a noise and then spat the pull cord out.
Under the cowl, everything looks as it should, to a first timer, the mysterious bit to me is that the rewinder engages the vertical crankshaft as the cowl goes on, but there's no slippage mechanism visible to allow the crank to go forward and the winder to go the other way when running. The winder has a shaped plastic block that engages the end of the crank but I can't see how it disengages and wonder if some smallish part has fallen out or off.
Does the end of the crank float up and down into the winder?
thanks
Roger W, January 2009
the bit between crank and pulls is alloy or plastic the problem is in side theres ball bering that were the alloy or if plastic melt causeing the recoil to stop retracting

dave, January 2009
The starter clutch has failed (that's the alloy square bit that locates into the plastic recoil pulley)- a new one is around £15 quid

pleasant, January 2009