Sturmey 3-speed adjustment
 

I've read over, and over that the cable should appear slack in 3rd gear. Mine does, but the chain is still drawn pretty snug.

I can shift through all three gears. There is no jamming up, or freewheeling. So...

Is it possible to have a well adjusted cable, but still observe tension at the chain in 3rd? Or would proper adjustment have to absolutely result in a slack chain?

Adjustment in first gear is more critical. With the shift selector in first, the indicator chain should be taut, but you should still be able to pull a tiny bit of chain out of the guide nut, like maybe a 16th of an inch or less.
This should leave the cable relaxed in third.

What you've read is absurd or you are misinterpreting it. "Slack" in this case pretty much just means no significant tension, not necessarily sagging. Adjust using the standard procedure. If everything works properly quit worrying.

When in doubt in adjusting SA AWs I use the actual range of the indicator chain (not to be confused with the drive chain, both have no tension moments) referenced against what the hub is actually doing. It's easy to use the adjusting barrel at the shift cable's end to find the start and the end of second gear's range of functional use. Then I center the barrel within this range so now the hub is "set" at the middle of the cable adjustment ability. I confirm by both shifting and using the first gear adjustment as Dan said. Andy

Its the axle fixing nits gripping the dropout that determine the drive train chain tension ..

the little pull chain that shifts the gears .. If you have the original one,(proper length) in 2nd the end of the rod,

where the little chain is riveted on , the shoulder of that piece is even with the end of the axle,
as viewed thru the hole in the side of the guide nut.

1st is tighter 3rd is slacker, but 2nd is where you get the adjustment, the middle gear..




....

Thanks everyone. It was a new cable and indicator installation. The indicator was shorter than the axel so I could not reference it to 2nd gear. I had it working... sorta!

I readjusted everything from scratch based off of first gear as recommended here. There is a noticeable looseness among the cable and chain in third now compared to how I had previously set it.... But the main point is that it's shifting nicely up and down through all three gears now!

The first gear trick worked for me. Thanks again!

Yeah, that's the official "correct" way to do it, but I find the first gear method 100% reliable.

SA AW troubleshooting.
 

Hi! New guy here. I recently bought a 71 Hercules three speed (beautiful bike) that was equipped with a Sturmey Archer AW hub. After I overhauled the hub (correctly) and followed the required procedure to set the gears (thanks Sheldon!), it now won't engage into first gear. Third gear? Check. Second gear? Check. First gear? Uh, no. All the other gears work great, the shifter works fine, and the indicator spindle is as smooth as a newly saddle soaped Brooks saddle. I've even pulled the indicator spindle out to where it's supposed to be in first gear and again, it doesn't engage. So what does this all mean? Are the pawl springs broken? Oh wait, they couldn't be. I checked them when I overhauled the hub and they were fine. Could the pawls be worn? Maybe. They looked fine to me! In any case, my hub is getting disassembled. Which is fine. 😎

Well, the obvious possibility is your claim of assembling the hub correctly is wrong. My Sutherlands manual has a few possible causes of no 1st gear. Some internal reasons are pawls not correctly fitted, pawl springs bad/bent/missing/backwards, thrust ring not seated on axle key. What is really going on? We hope for a follow up after the fix is made. Andy

After I cracked into the hub, I found that I had positioned the first gear pawls incorrectly! Not so much in the direction they ratchet, but the position the "sloped" sides of the pawls face. Something tells me when I installed the internal mechanism the first time, it wasn't fully seated!
If so, than that's a surprise because as previously mentioned the third and second gears worked perfectly fine. But anyway everything is working fine now, except I have to replace one of my cone axle locknuts (Hmn132) because the previous owner must have partially stripped the part.

It's interesting that nobody suggested the actual SA method for properly adjusting the "indicator" rod.

It's called an indicator for a reason, and the extended nut has a window for the same reason.

The adjustment is made in 2nd gear and the cable adjusted until the shoulder on the indicator lines up flush with the end of the axle like in the picture below. Apparently this is a lost art.

Maybe because it only works if the hub is assembled to spec. and an genuine SA indicator is used. Over the years with so many non-SA indicators mixed in the market, many mechanics have moved away from this method. Add that it's been 2 generations since AW hubs were at their peak, and many mechanic today weren't even born yet.

Anyway, the method works very reliably on vintage hubs with original parts. Otherwise, I prefer dropping to 3rd, and taking up the slack, but not lifting the indicator.

http://4.bp.blogspot.com/-N6VoDnri73...IndCorrect.jpg

To be fair, the OP did later mention that his indicator rod was not original, and too short to use the "official" method you describe:

Yes, but that was after 3 replies. In any case, I felt it was worth mentioning because it's become something of a lost art, and people working with these hubs should know.