Testing

Well... we've tested all of the components in the ignition system individually, and everything checks out fine:

1.) Spark plug - new, gap set (0.6~0.7mm)
2.) Boot - (10k ohms)

3.) Primary coil - (0.36~0.48 ohms) - checked between orange wire lead and coil base
4.) Secondary coil - (5.44~7.36k ohms) - checked between orange wire lead and spark plug wire
5.) Engine stop switch - continuity between B/W & B
6.) Main switch - continuity between B/W & B
7.) Pickup coil - (459~561 ohms) - checked between W/G & W/R
8.) Source coil - (270~330 ohms) - checked between B & G
9.) Peak voltage output of both pickup coil and source coil - no specs but they seemed OK
10.) Wiring connections - checked for continuity end to end and between ground on all wires related to the ignition system. Everything looks OK.

Soooo.... now what? 

Electrical Problem

Something on here is causing weak & intermittent spark.

Valve Clearance Set

Valve clearance adjusted. Intake side was OK. Exhaust side was too tight. Opened up to 0.007".

Flywheel Key Not Broken

I did find a chunk of the aluminum boss that broke off from the idler gear. Still worth pulling the flywheel.

Homemade Puller. Thanks Eric.

Key wasn't sheared off like I suspected. Now I'm stumped as to why the timing is slightly off. Oh well, we'll see if it runs and then worry about it.

 New stainless studs for the exhaust, cut from M6 SS threaded rod. New exhaust gasket too.

New gaskets and wire brushed the carbon out.

Timing Off Slightly

With the "T" lined up in the hole on the cover, the line on the cam chain sprocket won't line up with the upper mark. It's either on one side or the other. Somehow the timing is off just a bit. As far as I can tell, the flywheel must not be in the correct position, which means that the key must be broken. I guess I will pull the flywheel and confirm.