1) Sidestand down clutch engaged and in Neutral bike will start but once clutch released bike stops. If side stand is up clutch is released and bike in neutral bike will start but put side stand down and bike stops.
SOURCE: 2008 Yamaha TW200 will not move when clutch released
Here are the possibilities > > Bent clutch push rod, missing push rod ball bearing or push rod, worn out actuator shaft cam, Missing friction disk (5), or pressure plate (4), totally worn out friction disks, clutch plates not installed in the correct sequence, extremely weak clutch springs, stripped teeth on the clutch hub, wrong clutch cable length (inner cable vs outer cable), broken shaft, bent then broken shift fork stems, broken slider gear dogs and a missing shift fork pin.
You didn't say if anyone had worked on the clutch or gearbox so I am throwing in nearly EVERYTHING possible that could create the problem. A little more background and most of the above can be ruled out. Get back to us.
SOURCE: sidestand and neutral light problem for 2005 yamaha R1
Try checking the wiring for snags or earthing out and test the side stand unit off the bike with a conductivity meter ..also try an oil change .
SOURCE: bike does not start or
If the neutral light is not working then it's likely the neutral switch is faulty. But most bikes will start in gear provided you have the clutch pulled in and the sidestand up. It could be either the sidestand switch or the neutral switch, I'm guessing neutral switch since your light isn't working either. it's usually located behind the sprocket cover on a white plastic plug but it depends what model you have. They usually don't break but it might be dirty and need cleaning. Most yamahas you can take them out easily, just be prepared in case oil spills as you remove it.
SOURCE: my 2008 r6 will not
Part #6 in the link is your clutch switch. Jump the two wires together and try to start the bike in gear with the clutch lever pulled in , if it does, the switch is bad.
http://www.mrcycles.com/fiche_image_popup.asp?fveh=18093§ion=680498&year=2008&make=YAMAHA&category=motorcycles&dc=792&name=HANDLE+SWITCH+LEVER
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