ime, things that can make it drag, from the top:
air in the system. not as hard to bleed as many make out. if it's hard to bleed, turn the bars to the right and tilt the bike over so that the tip of the lever is the highest point and gently pull the lever in and out. this will work any air in the hose up to the master and out. if it's a coffin style master you can spray fluid everywhere doing this, so maybe put the cap on. you can feel the lever get harder if there's air coming out. slow pulls, a few fast, slow, tap the hose, make sure there's no high point loops in the hose, etc.
worn lever pivot - either the hole in the lever or the actual pin itself. st should have the older style large hollow pin lever pivot, the pins can wear a lot on bikes that don't get lubed, as can the lever. on these masters, the pin pushing the piston can also wear shorter.
on masters with the smaller, solid pin, the barrel on the end of the piston pushrod can wear in the lever, i've seen lots almost worn through the lever.
crap aftermarket levers giving excessive free play.
aftermarket slaves that are a larger in piston diameter, increasing the hydraulic ratio to soften the lever, but decreasing the slave piston travel correspondingly. the pressure plate might not be lifting far enough.
while not really drag specific, worn pushrods, slave pistons and seized pushrod bearings in the pressure plate. the seized bearing will spin the pushrod and it'll wear away and into the piston. i had a 900ss in once that the owner had had long time clutch issues with from new (tip - it's not the bike, it's you) when it was maybe 15 years old. it needed a new pack and once fitted i pumped the lever and the slave piston and pushrod were so worn that the piston popped out of the slave body. scared the shit out of me when it went bang.
warped steel plates. there should be 1 x 1.5mm "spring" steel plate, which is conical and if you put it on a flat surface and press the outer edge (if it's the right way up) the opposite edge will lift. the 7 friction plate pack the st had would also have had 8 x 2mm flat steel plates. using a very flat surface, check the rest of the steel plates to see if any of the other plates behave like the spring plate, flipping them to check both sides. if they do, they're warped and need replacing. you can't get around them being warped. you may also find someone has fitted more than 1 of the 1.5mm spring plates. there are also flat 1.5mm steel plates, used in the 1098 onwards 8 friction plate packs and the surflex sintered 8 friction plate packs that used to come in sp/sps/r models, so don't think any and all 1.5mm steel plates are springs. unless you have a stash of good steel plates, the only place to get them is a new complete pack. oem, barnett, ducabike, newfren, adige, surflex make packs. aluminium plates in a steel basket will make the plates sacrificial.
watching from above, pull the lever in and see if the spring caps move outwards as the lever free play takes up, then stop and then the pressure plate starts lifting off the pack. if so, the large star like washer at the front of the hub is eating its way into the hub. pretty common. you can add another washer (i've seen up to 4) or replace the hub if it's very worn. the original hub centre is a rubber block cush drive assembly, so it will move a little when ok, but only a little. if you remove the pressure plate and pack and push the hub backwards you can usually see the wear there.
i really don't agree that wear in the basket makes any real difference to how the clutch disengages. i have a customer that some idiot put steel plates into an aluminium basket 50,000km ago, and the plates have eaten their way quite a few mm into the basket. it's lovely to use.
sometimes, the peened out bits of the tangs on the plates in the picture can get between the steel plates and hold the pack apart and make it slip. just grind the peened out bits off and stick it back in.
so start at the top and work your way down. i've been intending to make a video of this for ever, but never get to it.
if you can't select neutral with the engine running, but it's easy with the engine off, it means the clutch is dragging.
if you have a large bore slave meant to change the ratio which will in itself extend the take up distance, you might be able to do away with the conical plate. worth trying.