My 2 month old 2010 Citica has developed an issue that is sort of baffling to me (25 years as a pure spinning and fly fisherman). 

It will NOT spin/spool up any line if the drag is set with really any tension.  The guide moves back and forth as the handle gets turned, the drag feels tighter as I tighten it, but the spool gets loose and spins freely.  However if I have little to no tension set on the drag it works fine, except for the fact a Bluegill could spool me with that drag setting.  Obviously this is not cool...

Before I get into it or send it out I was just wondering if anyone had any idea what an issue like this would be?

If you are using braid, do you have mono backing? 

If you are using braid, do you have mono backing?

Yes and Yes

(old Trilene XL and Tuf Line XP 12/50)

How much mono? I'd go with at least 20-30'. You need just enough to create a sufficient "brake" so that it won't slip. If you have at least that much, you have me stumped.

Spool tension knob to loose?.......

Try electrical tape. That's what I use

maybe some lube got onto your drag disks? Or like someone suggested, the line is slipping around the spool.

It could be alot of things, maybe try unspooling it and seeing if it behaves the same without line?

There is at least 30 yards of backing, I haven't used any lube yet on or near the reel yet.  I will go double check the spool tension knob to be extra sure.

 

If you were palming this reel yourselves you could put your thumb over the top into the window and use your thumb to move the spool forward and backward when the drag is tightened.  I'll get a video up later on youtube or something and have you all take a look.

Bummer 

I would contact Shimano and let them deal with it, assuming you haven't opened up the reel and caused the problem