'81 KZ650 CSR - Head Rubber plugs

Yup - stock airbox. 
Since getting the bike last August, I have put in a new air filter, oil filter, oil, sparkplugs, and DynaCoil DS2-2 ignition. Disassembled the carbs completely apart and soaked them overnight in 50/50 PineSol/water. 

Sure hope this stupid little hose was the culprit all along!

Did you go with the Dyna ignition because it wouldn't start or was the stock stuff bad? 
The coils are probably the weak link in the stock ignition system. 
I'm currently running the original Kawasaki electronic ignition w the green Dyna 3.0 ohm coils.

When I was going through diagnosing the no-start last fall, the pickup coil resistance failed one of the connections (there was no resistance of any-kind). Referring to page 5-10 in the manual. That's why I swapped to the Dyna ignition.
I have heard that the coils can be an issue, but the multimeter told me mine were within range, so I left them.

Blocked off the random hose last evening hoping that the bike would start - no luck. Lots of cranking. The odd pop and bang, but nothing. Took the spark plugs out and they did not appear to be wet.

Borrowing a compression meter from the shop here at work to verify that I have compression from the engine. Since its been well over a year since the bike has run (according to the last owner), I am anticipating that the compression will be lower than it should since the engine won't be warm, but I want to make sure I have at least some kind of compression.

Ugh.

Just an FYI.  Sometimes the ignition coils can test fine, but still be bad under load.  Some guys heat them w a heat gun to mimic a running condition.  Mine tested within spec, but I rode the motorcycle at highway speeds, then stopped to feel the coils, pressing hard w my fingers >> they were very hot.  The coils should get warm, not hot.  I replaced the coils because the motorcycle was kind of running poorly at high speeds.  The problem wasn't severe but you could tell the difference compared to when it was running perfect.

I assume you went with the DC1-1 3.0ohm coils from Dyna?

Is there a way to confirm those are the culprits before dropping $200 towards parts that may or may not fix the problem? (Though I am starting to think it may be something like that.)

Did you just install the Dyna pickups and used stock coils? Correct? 

You said you tested the coil primary and secondary resistance, and it’s within spec. If so then I’d say they should be good. They may fail when they get hot as Martin has mentioned. I’d say the should start the bike. Are you getting spark at the plugs? Have you tired starting fluid sprayed into the top of the air box? Pull the carb bowl screws and verify you have fuel. Did you static set the DynaTek pickups per instructions with a test light? 

Not sure soaking the carbs will be effective. The usual method using pinesol is to boil them. Your not doing yourself any favors unless you completely break down the carbs and throughly clean them. 

Dyna DS2-2 installed last fall. Yup - static set per instructions with a test light. Left the stock coils on the bike. I'll re-measure their resistance this weekend.
Yes to getting spark at the plugs against the head. I'll confirm this weekend.

Yes I have tried starting fluid into the airbox. Nothing. Not even a burst of activity.

Yes I unscrewed the drain screws and had fuel run out of each bowl. Put on a new clear fuel filter so I can see the fuel flowing.

I soaked the carbs completely broken down. Took the four carbs off of the rail. Then disassembled each carb and soaked in four different containers. Then used a guitar string, my air compressor, and old tooth brush to clean and completely dry out the parts before reassembly. They looked a lot better and smelled great!
When I put the carbs back together, I set the fuel/air screw to 1.5 turns out. To confirm, that's a rotation of 540 degrees, correct? (One turn equals 360 degrees.)

Thanks for adding your mental power to this. I just want to hear this engine run!

Well sounds like you have fuel and spark covered. With a fresh air filter you should have everything an engines to run. I’m wondering if it’s time to pull the cam cover and check timing.  A compression test may reveal something. 

A proper compression test and pulling off the cam cover are two things that have not done yet. So hopefully that reveals something.

With a cold engine, I am not expecting full compression. Is that a fair assessment? What would be a reasonable range?

A cold compression test on an engine that has not run in a good long while, may tell you nothing. Some rings may be gummed up and stuck in their grooves. A good hard run will usually fix that problem. Even on a recently ridden engine, I am not aware of a reliable way to predict cold pressures. I suppose if there is no pressure, you can be reasonably sure there is a problem, and if there is some pressure, maybe it is ok-ish.

Sparks show good, bright spark grounded against the head.
Compression test on each cyclinder around 140 (within range according to the manual).

I feel like I have all the ingredients but yet no cake!

As I was trying to start the engine, it was starting to pop more and have a few loud bangs out of the exhaust. But nothing close to sounding like it is about to turn over.

I'm recharging the battery and will try again.

You mentioned earlier that the plugs looked dry. Yet you have fuel in the bowls. If you have spark and compression then you have a fuel problem. For some reason the fuel, either gas or starter fluid isn’t getting pulled into the engine.


Or the timing is off. Might be why your hearing the pop out of the exhaust.