Originally Posted by Akadis
I think the ratchet thingy in the rear sprocket is either gummed up or has a broken spring inside. Try running some THIN oil into the gap (this is hard to explain - here goes): Lay the bike on the ground with the chain on the top side, look near the axle, turn the pedals backwards, OK - the crack where the turning sprocket meets the not-turning bit.........put oil over that crack and let a lot run inside. If it is gummed up, the oil will loosen it and make it work. If that fails, get someone to have a look because it is a tricky repair job!
+1 This would be my guess. Us newbies like to use the wrong (and TOO much) lubricant, which gums up the works. I think the "ratchet thingies" are called pawls. If they don't ratchet correctly, they won't engage the gear inside the hub properly.