It sounds like the spring may have failed which led to a lack of tension on the recoil, causing the cord to loosen and come out of the groove and tangle. If you have it apart already, and you can not just reattach the spring, check with your local power equipment dealer and get a new recoil, with the spool, cord, spring and all.
If you wrapped the cord around the shaft and ran it, you may have frayed the rope and that could lead to failure of the recoil cord.
If you can just install the spring, try that, and careful on the pull starts so you don't snap the string.
Good luck
Frank