(Can you tell this is my first bike?

)
To make sure I'm understanding correctly... that 1/8" of freeplay at the clutch should translate into nearly 3/4" at the lever? (Having 3/4" at the lever would be beautiful...) Given the little I know of the bike's history and from what you describe, my first guess would be cable binding -- but I had the bike stored over the winter after buying it (couldn't take a riding course until late Feb.), and I would have hoped the dealer's search for repairs to charge me for would have turned that one up.
The bike is at around 24000 miles.
Thanks again.
If you can't get enough freeplay with the adjuster at the lever, you may have to shorten the cable at the clutch end of the cable adjuster. You are understanding correctly. The freeplay at the arm just insures that the clutch isn't being held partially disengaged and wearing the clutch and or linkages.