1981 KZ 440 LTD Belt Drive (late model) Belt Squeaking

Double check without the tool.
Press on the belt midway with about 10 pounds of force. Belt deflection should be between 1/3"-2/3".

You should have not created the play in the rear drive just by adjusting the tension and alignment. Your going to have to diagnosis it better. Is the belt pulley moving on the drive hub, if it is check the bolts the attach the pulley to the hub. If the pulley and hub are solid the it could be a worn out crush drive.

In the included diagram
Check nuts# 314,
Hub is #42033/A
Crush drive is#92075

This might not be your exact parts number only displayed for reference.

I loosened the tension a little bit and re-aligned the rear wheel. I trust the tension gauge way more than my arm pushing down 10 lbs, and the tension gauge says it is smack in the middle of the two lines instead of being at the upper line. The buzzing / squeaking is now completely gone, the rear wheel turns much more easily now when in neutral, and there is almost no pull to the left when riding no handed.

The tire still can turn about 1-2 degrees before the belt starts to turn, but I'm hoping it is not really an issue. The nuts #314 from the diagram seem to be locked on still, so maybe it is the Crush drive. Next step is to learn what that is and if it's really an issue.

Put the bike on the main stand and sit behind it. Grab and hold The belt pulley then with your right hand grab the tire and try to move it without moving the belt pulley. If you can keep the pulley still and the tire moves then the rubber crush drive is bad... if nothing moves independently then the problem might be in the front pulley.