Good to hear another person trying their hand at restoring a Z650. I'm well on my way into fixing up my '77 C1, and for whatever it's worth, would be glad to share my knowledge with you.
www.kz650.info/
is another great resource for this bike. Between KZrider and kz650.info and a decent manual you should have all the help you need to get your bike going.
I'm sorry you had some bad experiences with ebay, but they're really the best place to go for cheap and abundant parts for your bike (JMO). I've done alright buying from them as long as I stay away from untested electronic parts with no return/exchange policy (found this out the hard way). If you're dead set against ebay you could try the forums for your used parts needs.
I've posted a picture of my project. It was a filthy, beat $100 non-running basket case when I bought it. I've put some new Uni foam air filter pods on it and a new right rear blinker since this picture has been taken. Also on order from ebay is a used gas tank, and rear cowling in great shape, just needs painting. She's still pretty rough looking, but she runs great and sounds incredible with a 4-into-1 header and will hit 12000 RPM. So far I've got about $370 invested in it. She's ready for the street.
By most accounts these are tough bikes and were built to last with a minimum of maintenence (adjusting the valves is kind of a pain as you have to remove the camshafts to do it, but it is much easier than it sounds and is within the skill set of most backyard mechanics).
I love my KZ650 and so far it's been a rewarding experience bringing her back from the dead and I intend to complete the restoration a little bit at a time as my schedule and budget permits. Keep us posted with your progress, and hope you have fun with it.