Throttle control not working in Neutral

[slywuf]

Picked up a 1989 Maxum 1700 at auction with a 140 HP outboard Chrysler. Going over it end to end to fix-up and clean and make a boat out of it again. Noticed the shifter (US Marine) was not working smoothly, so took if off, cleaned, lubed and then watched the action at the motor end while operating. The forward - reverse cable seems to be fine - engages the transmission properly. Continuing to push forward on the shifter then engages the throttle linkage and opens up the carbs. Problem is, when shifter is in neutral and I pull out on the lever to disengage the shifter cable, the lever will not move forward or backward. Looking at the engine end, the towershaft arm sits in line with the interlock lever arm that is connected to the transmission shift shaft that moves up and down depending on what gear is selected. The towershaft arm can only move, allowing carb linkage movement if the interlock lever arm is above or below it. So, how is the carb linkage supposed to work in neutral when it is being blocked? I did disconnect the throttle cable at the motor end and operate the shifter lever at the opposite end, and see that the throttle cable is working fine. What am I missing here?