I would remove the nut and washer then re install the nut until it is flush with the end of the shaft. Stick a large screwdriver under the edge of the flywheel and while pulling up on the handle give the end of the shaft a sharp rap with a decent size hammer.

it the type that where the bolt gose into the crankshalf.
not the nut type.

The sheared flywheel key will not make a difference in removing the flywheel. B&S sells a simple, inexpensive puller that will safely pull your flywheel or you can make one yourself.

Remove the crankshaft bolt. Remove the two studs on each side of the crankshaft holding the metal ring that secures the plastic cooling fan. Remove the plastic cooling fan, reinstall the crankshaft bolt without washer and run down to just above the flywheel. Drill holes in a pc. of flat stock, 3/8" thick or thicker by 1-1/4" to 1-1/2" wide to match the holes in the flywheel where the fan retaining ring studs were, drill oversize to make fit simpler. Buy two grade 8 bolts long enough to go thru the flat stock and 1/2" into the flywheel. Tighten them evenly, IF you get a lot of tension on them and the flywheel has not let go, hit the flat stock a good rap over the flywheel bolt. It may sound like you have broken things all to heck when flywheel lets go.

Walt Conner