"Loose" feeling when turning/ leaning and drag at highway speeds 81 kz650

Okay I measured the slack pushing up on the tightest spot and it was about .9-1 in so should be in tolerance. However while doing this I did notice that the wheel coupling (seats inside the dampers) moved slightly free from the wheel. I would spin the wheel very slow and it would have a slight "hesitation" or I guess free play would be a better term. Is this normal?

A Little Play in the wheel coupling (sprocket carrier to wheel rubber damper) is nomal.
How about your cuted rear damper springs, have you replace them???

Have to ask, did you check your steering neck bearing Play?
A modern taper roller bearings upgrade is a must have on every old Kawasaki.

www.allballsracing.com/22-1014.html

I have not replaced them yet I will very soon. The extra set I have has smaller springs don't know how much it can or will effect it. Just have to get a bushing out of the existing to put in the new set. And the stearing neck doesn't seem to have any abnormal play I will look into it though

High Speed wooble is the master Problem of the old steering neck bearings, don´t ask how do i know it....
Poor rear swing arm bearings and old stock rear damper effect the same issiue.