Has this motor been blown up before? Or been submerged in water before? No piston chunks or other debris in the crankcase?
If so, thar' lies your problems. Cases will need to be split to clean it all out and replace bearings, seals and everything thats gotten ruined.
If not, while you have that right side cover off, take the left side cover off and check out the shifter ratchet/stops assemblies. Section 9 in the FSM covers that.
If all is well with those then I would suspect bent/broken/wornout shift fork(s) and/or shifter drum cam grooves torn up or the drum seizing up in crankcase dirt/debris. You can check the drum rotation/condition a little better while the left side cover is off.