Hi Everyone,
I am wading through my first major repair of a small engine and I have successfully, with the help of MANY videos, I've been able to put the mini tiller back together, EXCEPT for the recoil spring and rope retracting after I pull the rope in an attempt to start the unit.  Once I release the flywheel from the blower housing, the rope will retract.  I know I must have the pawls in the wrong position and for the life of me, I can not figure out how to place them so my tiller once again works.  This is what is in the technician's book:  This starter uses two engagement pawls bolted to the flywheel with shoulder bolts. Each pawl uses an engagement spring to keep the pawl in contact with the pulley hub. The pawls lock into two of the four notched surfaces located on the starter pulley when the starter rope is pulled. When the engine fires and the flywheel speed exceeds the speed of the starter pulley, the pawls disengage, and centrifugal force keeps the pawls in the disengaged position (diag. 5-1).  I have the page from the Technician's Manual as well, but it won't let me upload that photo here. 

When installing the cover, pull the starter cord slowly and it'll drop down over the pawls.
 
You shouldn't have to force it at all.  
 
 
.

Thank you for your reply!!  I spent the afternoon attempting your suggestion.  The cover will drop down  between the pawls and allow me to pull the cord out.  The pawls do not allow the cord to retract.  I took everything off, made sure it all had oil/grease and it's still doing the same thing.  I'm pretty sure it's the pawls not positioned correctly, however, I'm not sure how to position them. Here's the photo from the Technician's Handbook.  
 

Zooming in on your first pic, that flywheel is cracked all the way around..
 
Looking quickly, it looks a casting mark but your actually missing a chunk, just beyond the main
flywheel nut.
 
Your pawls, the springs all look proper (looking at the slight cut outs for the spring ends...
 
You need a new flywheel.....
 
.

 

Excellent observation!  I will order a new one from here and move forward.  It took me a minute to get that flywheel off!  LOL  Thank you, I'll be back!