Try stripping the clutch out and clean the plates with brake cleaner, Re assemble in the exact order it came out as on some clutches the thicker friction plate has to go in 1st. Don't soak the plates just give them a good drenching and let the cleaner evaporate.
Check the steel plates haven't glazed too much, Give them a light sand with fine wet and dry 800 to 600 just to make them dull, dont go to mad with heavy grits as it will wear out the friction plates when back together.
Contamination from the water leak has probably soaked into the plates.
Atf should give the sharpest clutch action over all the other oils, with out going into science, it basically grips better so to speak.
10 40 is fairly thick so it's helping with the clutch action at the moment but will probably drag when disengaged.
Check for play in the kickstart shaft, Could be a worn bearing or bush wearing the seal.
steve_earle's post in Weak Clutch Engagement. was marked as the answer