I was about to reassemble my flywheel clutch when I noticed about a quarter of an inch of rotation in the vertical shaft that did not move the clutch release fork. When I pulled it apart I found that there is a “cutout or wide spot” in the keyway for the woodruff key. I was surprised to find the clear imprint of the key in the bolt and the thread marks in the shaft. Is this normal?  If so, what is the purpose of the wide spot and the additional rotation?

That notch in the yolk should not be there, it was caused by the clamp bolt being loose and over time and use worn the notch in there.

Notch is supposed to be there. That is a clearance hole for the bolt to pass through the yoke and it prevents the yoke from sliding down the shaft if it becomes loose.
I made one of those shafts for one of our D2's a couple years ago and it was somewhat tricky setting up the shaft so the I could mill the woodruff key slots. You see the keyways are offset a few degrees. I ended up setting it up on my indexing head to rotate to the proper degree to cut them. Then I used a 1/2" endmill to put that slot in and they are off a few degrees from each other too.

I was referring to the keyway groove, thought it was worn in.

Notch in the shaft is correct, a bolt with less thread length would be preffered but not vital as long as it was tight. The notch in the keyway in the yolk is wear from the bolt bieng loose for a long time and needs repair or replacment.

Sorry Gary I missed that you were referring to the yoke.
If you cant find a better yoke where the key way isn't worn; I would broach a wider key way in the yoke and cut a wider woodruff key in the shaft. Another way is wider key way and step down a wider woodruff key to fit shaft.

the notch in the shaft is there to keep the yoke from sliding down out of position. I would get a new Cat grade 8 bolt with enough grip length to reach across the gap in the yoke, and cut off enough of the thread protruding out of the nut to make it look legit. The wear in that notch will be insignificant on a new bolt, and grade 8 bolts are pretty tough As for the woodruff key, previous reply have pretty much said it all.

Also, dig out your old ONE SAFE SOURCE catalog for specs on Cat bolts.

you could rebuild that keyway with a bit of bronzing or use a devcon metal epoxy either way slightly over fill then file to size if you use devcon it must be spotlessly clean no oil residue or it wont hold. you can also skim coat that shaft were the bolt has worn into it with devcon too.

replace that bolt its stuffed.