1970s KZ400. Which is the one to get?

This what it looks like inside.
.


.

 These is the holes that gets threaded with a pipe tap. 

.


.

Drill 2 holes somewhere in the middle of this channel. This will allow it to 'breath' so as not to have similar problems in the future.

 

Another pic of the hole to be plugged

.

The head gasket is where the bubbly section of paint is.
I found the "Factory bulletin" for the leak issue on kz409.com, but it doesn't mention anything about capping the exhaust passthrough.
I ordered the head gaskets.
Once they arrive, I'll open the engine and hope it's only that.
 

Is your bike a 1976 with single exhaust?


.

Nebr_Rex wrote:

Is your bike a 1976 with single exhaust?


.

Yes, It is 76 S. Both headers joint into 1 muffler.

"Drill 2 holes somewhere in the middle of this channel. This will allow it to 'breath' so as not to have similar problems in the future."

How big should those holes be? 
 

1/4 in. should be big enough. 
I suggest you get some dual exhaust. The factory single exhaust is what caused the crack you have.
It restricts flow and causes heat build up which leads to burnt gaskets and cracked castings.
Seen this on trucks and motorhomes including a pickup I have.
Hopefully what is cracked does not break off. If it does epoxy should fix it.
Completely disassemble the head when the threads are cut and then thoroughly clean it before reassembly.
Or you could end up like a member on here who didn't and blew up his engine.


.

Welp!!! 
I Definitely found the source of the oil leak.
One of the 8mm bolts that holds then head to the cylinders is broken flush on the cylinder jug.
​​​​​​Still trying to remove it, but it doesn't give.
​​​​​​What's the best way to remove the bits of the old head gasket that remained stuck to the head and the cylinders?

You will have to pull the cylinder jugg.
As for the gaskets, use a small sharp blade and then wire brush with some elbow grease. 
 

I was really trying to avoid that. I don't have a ring compression tool.

I don't use one on these engines. The bottom of the cylinders have a chamfer. When they were assembled at the factory they were just shoved down over the pistons. I usually have to use a small screw driver to help feed the rings into the bore. You might want to consider new rings and a valve job since you going in this far.


.