[Al Skierkiewicz]

Suneet,
You never mentioned whether you disassembled the clutch housing to remove the pins so I am going to assume you did just that. In all likelihood you have the clutch ring assembled incorrectly and therefore even though the outside ring is pointed at the locked (drill) position the clutch is at another spot. Open the transmission and check your orientation again and reassemble. Make sure that the clutch assy is engaged with the transmission housing correctly before rotating into the locking position. (as I remember there is only one way to correctly engage the clutch parts.)
If you have never opened the transmission then there is a possibility that you have received a defective clutch.