Tightening rear quick release stops rear wheel I have a medium sized Trek Mountain Track/Antelope with a seven speed freewheel. When I tighten the rear quick release, I have to carefully back off on the tightness so that the wheel will actually turn. This is not a brakes issue, I'm dropping the wheel in while the bike is upside down, and I can spin it freely when the quick release is loose. I don't believe its has to do with lateral rim alignment, because that would hit a brake pad in one or a few distinct areas. I'm getting even friction when the q/r is too tight.

My first guess is that I have badly adjusted cones on the axle, and I'm guessing this because I don't know how else the dropouts would apply so much friction.

What should I look to next? 

Update
I adjusted the left hand cone looser and I was able to get it adjusted to take a normal amount of pressure on the q/r and it still rotates well. The cone races are kinda gravelly by the feel, I think I'll definitely keep this a light duty bike.
The hub is adjusted too tight, or there is damage to the bearing track which cause higher than normal friction when the bearings are compressed. 

You're on the right track.