Hey turtle,
Just so you know, the one on the engine is usually called the drive clutch or primary. The one on the transmission is called the driven or secondary. If the belt is sitting low in the secondary it sounds like the spring or something might have broke on it. The belt should sit up high on it with the top of the belt near the top edge of the pulley faces. That is also how you tell if the belt is worn because if it wears to much it will sit lower in the secondary pulley. So if your belt is really worn out that might be the problem. But by the sounds of it, its sitting real low. So something must be wrong with the secondary. Maybe if you could take a good picture or 2 we might be able to notice something? Just an idea if you need more help.
Edit, I just noticed in the belt picture you can see it a little. Looks like its closed like it should be in the picture?