| The basic problem is that the lever is disengaging the clutch too close to the bar, so the plates don't separate enough and they drag. The continuous dragging when disengaged at a stop wears the friction material faster and makes it very difficult to select neutral. The stock clutch cover has small vents to eliminate excess friction material debris so that's why you’re getting a lot of dust on the right side, aft of the clutch cover.
If the lever shortened-pull suddenly appeared after a service (that didn't involve the clutch hydraulics) then the likely explanation is that someone changed the 4-position adjustment setting at the clutch lever.
Otherwise, the problem is air in the clutch line as other’s have mentioned. Unlike hydraulic fluid air is compressible, so when you pull the lever the air compresses first before enough pressure can be built-up to move the slave cylinder and pushrod that in turn separates the plates.
If you don't have a bleed valve near the master cylinder, bleeding the system down at the slave cylinder is usually difficult because any air bubble rises to the highest point. The newer bikes now have bleed valves internal to the MS reservoir that makes the bleed process much easier.  | 
Shazaam!
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