I have a 2 speed Daiwa ld30h that has an issue.....When I loosen the drag knob it effects the free spool tension. If I tighten up the drag it works fine in the engaged position but if I put it in free spool it releases with tension. Maybe I put it together incorrectly after servicing it?
Not clear from your description what's going on, but it sounds like a spacing issue. When you back off the preset knob too much, the drag pressure plate might be hitting something.