It could be a problem with the pull start or the engine.

1. Are you able to turn the flywheel at all, either way, or is the flywheel locked solid in both directions? If it will turn one way then the problem is the pull start. You could order a new one from the spare parts section or try to fix it. There are instructions on how to fix it here http://www.nitrotek.co.uk/help/pullstart.html

2. What were you doing when this happened? Were you pulling the pull start and then it happened or was the engine going, then it cut out and you could not pull it at all when you tried to pull it again? If it was while you were pulling the pull start then it is most likely to just be the pull start. If the engine cut out and then you could not pull it after that then it sounds like something has happened inside the engine and you would need to carefully take the back of the engine off to have a look.