So your valve shim clearances are all at .007 (I don't know for sure what the spec on your bike is). At any time during the "4 times" you looked at the clearances did you remove the cam/chain?
From your posts I don't thing you changed shims but I'm wondering if you took more than just the top cover off the engine?
You also mention oil on top of the Pistons, how did you see that?
My point being is if you disassemble anything to do with the cam chain it must go back a specific way, otherwise you will have CRAZY timing issues if not total engine failure.
General rule - NO WD40 EVER ON A KZ.
Have you checked that electronic ignition module to know if it's working properly? Is the wiring correct, connected, not crossed or contacting metal? Check for continuity.
The old school points for your bike might cost $12 new, maybe it's worth going back to stock to get your bike running right.
'79 KZ650B3 (stock)
'79 KZ650B3 (parts bike)
'06 HD 883R
