It worked before you removed and reinstalled the side case, so that is the place to look. Pull the cover again. I'll bet you'll find something out of whack.
Your bike is a VT700. What year, so we can look at a parts break down.
Edit; I was just looking at the Bikebandit parts diagram for the 1986 VT700. Conventional shifter mechanism, and as I said you should be able to see some of the shifter ratchet when the side cover is off. Look closely to that area.
Odd, it didn't look that soft before I rode into it...
Last edited by gat803; 01-03-2013 at 05:29 PM.