Usually the problem is the clutch master cylinder.  It is generally agreed that rebuilding is not a good choice because often the problem is caused by a broken spring in the cylinder that then scratches the cylinder walls.  Replacing with a new unit is the best option.  See the link to MarcusD's page on the Links page; his page has a procedure.  Note that pressure bleeding is usually required.  Some info on that can be found here.

The Townsend site has a service note (05-93 0329) stating that the problem can be caused by swollen master cylinder piston seals, and this in turn can be caused by the wrong type of supply line from the fluid reservoir.  Specifically, if the hose that runs from the reservoir to the clutch master cylinder is a smooth rubber type of hose, it must be replaced (with hose # 41 21 562).  The correct hose has a braided cloth-like appearance.  In the case of swollen seals, you might get away with a cylinder rebuild instead of a replacement.

Worst case, the problem can be a bad slave cylinder.  In that case, the transmission has to be removed.  And in that case, it's best to do an entire clutch job.