I'm thinking I was getting distracted - DGD is trying to piece a crazy quilt - now I know why they call them crazy...
Any way - I was thinking the knob was stuck - it is the screw... Yup you might have to drill it out or push it out from the behind. It does sound like a stripped thread. If you can get the set screw far enough out to make it turn maybe you can put some tape or something over it so you can get the clutch knob off the machine - then order a clutch knob with out a stripped screw somewhere.