[blykins]

Everything still turns inside the trans when it's in neutral and the clutch is released.

Sounds like it's a clutch issue, and I agree with Dave, it sounds like the throw out bearing.

When you say that you have a hydraulic clutch, do you have a master/slave setup with a clutch fork, or are you using a hydraulic throw out bearing?

Shoot me an email and I'll help you do some troubleshooting.