speedo drive is not lined up right.. if you back off the nut on the left side of the axle, you will see that it frees up. at least mine did.
Now, do NOT ride it like that.. get the speedo drive to align properly and torque everything to specs. there are 2 tangs (for lack of better word) that need to fit into 2 recess's in the front wheel. pita to get right, but when done, you can torque to spec and still have free spinning wheel
also, make sure any spacers are installed in correct position