KZ650. Carb #3 spitting fuel out. Wont start

Ok more questions (sorry about that)  I agree with hardrockminer, if I read your chart correctly it appears that you have made some of the valve settings tighter. I would ask if you did another compression test since changing shim sizes? If so what the findings were, As to the jetting will not know until you get the bike running again.I have found this method of setting valve lash helpful in the past. This was written by a member on the kz650.info site (ronkz650,) in the past.  

"They will always measure different at different points of rotation. 
There are different ways to accomplish the same thing here. The general procedure accepted and pretty much outlined in the manuals involves turning the engine over to a specific point of rotation, then digging into your stash of feelers and measure the exact clearance between each valve bucket and cam lobe at the correct point of rotation. Then remove the cams, swap shims, reinstalll the cams, retime the cams. I learned long, long ago there's an easier way. Takes maybe 5 minutes at most to check all 8 valves. 
Start out by getting your feelers, you need a .05mm, .10mm, .15mm and a .20mm. This is all you need for the most part, don't bother checking with more precision than that because it doesn't matter as shims are only available in .05mm increments.
Generally shoot for between .10-.15mm clearance cold. Turn the engine over slowly clockwise with your 17mm socket on the right end of the crank. Do this while constantly trying to insert a .10mm feeler between a bucket and cam lobe. If at any point of rotation a .10mm fits, try a .15mm. If not try a .05mm. This can be done quickly when you get the feel for it. Once you figure the largest feeler in .05mm increment that inserts call that your clearance, so if a .10mm fits and a .15mm doesn't, call .10mm your clearance. Do this for all 8 valves then figure what you've got to change. For example say the 8 valves measured .10, .05, 10, .15 on one cam, you'd see 2 are right where you want them, and one needs a one size larger shim, one needs a one size smaller to bring them all to .10mm. So then you remove your upper camchain idler, unbolt the cam, remove the caps, then carefully keep all chain slack between the cams and the chain tight going down in the engine and carefully move the cam towards the center of the engine, remove one of the valve buckets needing adjustment, retrieve the shim, note the size and obtain your suitable replacement, reinstall, carefully lift the cam back in position keeping chain tight going down in the engine, torque down the camcaps to 7 ft/lb or so and you're done with that cam. Recheck clearances and move to the other cam. One cam at a time, do the way I say and timing will not be fouled up." 

Valve lash only decrease and do not increase, so shiming to the max. lash 0,10 - 0,15 mm is the best.

Admittedly I don’t recall checking measurements after changing the shims. I will attempt the method listed above as it seems easier than the manual’s method. 

Was able to get a look at the bike today and noticed fuel where fuel should not be. I have included photos. I’m at a loss as to how fuel gets to these upper locations. The starter cover makes sense but the lower body of the carb is confusing.

 

No gasket last for ever. It`s time for some new bowl gaskets. I prever the Keyster rubber gaskets.

• Keyster Nr. = YFCG27R

www.motorradbay.de/z650b-yfcg-27r_1-gask...wasaki-p-2786-4.html
 

They have brand new keysters.  

So I have the valves re-shimmed and now I’m working on the timing chain but the best  I can get the exhaust “T” at is shown in the picture. The #3 exhaust valve is too high to allow me to rotate the cam any further.  Is there a work-around or is this “good enough “
Exhaust cam


Intake Cam

If the timing mark is on tdc the exhaust cam is one tooth out.  Mark/arrow should be level with the head casting so needs rotating clockwise one tooth

Okay rotated it so that it lines up now

Ripped the top end apart today to adjust my existing issues. Have it all back together and for some reason on valves 1, 2 and 5 there is no room for any of my feeler gauges. I’m at a loss as I feel as if I’m following both the manual and the kzriders support and having no luck. 

Here are my numbers:
original.                   Current
#1 .102 - 270          No space - 275        
#2 .102 - 275          No space - 265
#3 .152 - 265         .152 - 265
#4 .076 - 265         .127 - 275      
#5 .152 - 270          No space - 275
#6 .178 - 265          .152 - 265
#7 .127 - 270          .152 - 265
#8 .102 - 265          .203 - 275

I’m not sure how to correct this or if I have other issues with the motor 

Any suggestions?

You've done it wrong.
Valve No1= you had 0.10 gap with a 270 shim. If you wanted a bigger gap you needed to put a thinner shim in (265) not a bigger shim (275).
Youve done the same on some of the others aswell. 
No 2 shim can't be seated or you've mis measured or the shim isn't 265.
No 3 ok
No 4 you've gone thicker not thinner yet your gap has increased = impossible. 
No 5 you've gone thicker not thinner. 
No 6 unchanged but gap has changed. Mis measure. 
No 7 OK but mis measured. 
No 8 you've gone thicker not thinner yet the gap has increased = impossible. 

Thinner shim = bigger gap. 
Thicker shim = smaller gap. 

Take apart again and start over.  Take it slow and methodical.  Make sure your measuring gaps accurately and ensure shim sizes are what they say they are by measuring the shim prior to fitting. 


Once you are happy you have done it right turn the engine over by hand several rotation to ensure the shims are properly seated and measure again. 

Did you measure against the same point on the cam both times ?

Follow warren3200gt’s advice. One other tip. Make sure to keep your feeler gauges clean. Oil film on them will affect the accuracy. Make sure there is no excessive oil on the shim and lifter cup as that will cause the same skewed results. 

Thanks gents. 

Really appreciate all the help. Going to get back at it after the weekend. 

When I took some of the shims out they had very thin pieces of metal between the shim and the valve, but some did not. Is this an issue?