Firt off lt me start by sorry for my ignorance. I'm new to this. The issue is... When driving my 8 feels as if the clutch is still engaged. ie. in 3rd gear the rpms shoot up as if the clutch is pressed and weird burning smell. does not do this all the time. also clutch pedal is very loose. pedal is almost to the floor before clutch will engage. HELP!!!

 

Extracting what you mean, instead of what you say: Your clutch disc friction material is almost gone, and is no longer providing the friction needed. Get your clutch replaced ASAP.

Take a look what happened when mine let go: https://www.rx8club.com/series-i-trouble-shooting-95/shattered-clutch-repair-starter-removal-224849/

While you are at it, get down there and take a look at your clutch pedal assembly, it could be breaking (Mazda warranty up to 100,000 miles on it)

(And please learn to describe better. The words you use are contradicting what you are trying to say. I.e: The clutch SHOULD still be engaged when in gear and driving. Disengaged when you push in the pedal, re-engaged when you let it out)