Small Engine Troubleshooting Problems? Ask a Mechanic Now.
Welcome to JUST ANSWER small engines, let me try to help you !! I don't know it all, but maybe together we can get you a satisfactory answer!
# 12 in the link below is the lever that has to move to activate forward and reverse. Go directly to the transmission lever and see if it is going into full travel in the reverse position. If it is, and it does not backup, problem is internal to the transmission.