by 
The Curious Bag
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Clutch slip and clutch drag are two sides of the same coin. Both are the result of worn components and can cause serious damage if left unaddressed. Generally speaking, clutch drag can cause more damage than slip, but it is usually the more easily remedied of the two.
Clutch Function
Clutches work by pressing a friction material similar to that found in brake pads against the engine's flywheel to transfer power. When a clutch pedal is depressed, the friction surface is pulled away from the flywheel to engage neutral.
Clutch Slip
This condition can be recognized by poor acceleration, poor fuel economy, engine revving independent of acceleration, and usually a strong odor of sulfur. Clutch slip is the result of poor engagement between friction surface and flywheel. It usually requires clutch replacement.
Clutch Slip Consequences
Eventually, one of two things is going to happen: Either the clutch will fail and refuse to move the vehicle, or it will create enough heat to flash-ignite any flammable fluids around it.
Clutch Drag
Clutch drag is the opposite of slip. It occurs when the clutch will not release fully. This is usually caused by a loose or leaking clutch linkage or worn clutch fork.
Clutch Drag Consequences
Failure to address clutch drag will result in broken transmission synchronizers.
Source:
Integrated Publishing: Clutch Malfunction Article
Corvetterestoration.com: Blue Print Technical Paper on Clutch Diagnosis
Resource:
How to Diagnose Clutch Slip (Video)
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