Your tractor has a two-stage clutch. When the clutch is pushed all the way down it should disengage the PTO. If it is not disengaging either the PTO clutch is out of adjustment or the clutch disc has rusted to the pressure plate. Common problem on these tractors is the PTO clutches are out of adjustment and people Force the shift lever into gear. Most of them that I have pulled apart the gears are destroyed from doing so. You may have two problems.