If you are one tooth out you will have a noticable power loss. You could still be ok. If you were to make this mistake toward the danger side you would have felt it bind when you manually turned the engine over. Normally for a gasket to go you will notice a loss of radiator fluid through consumption or from displacement due to combustion pressure entering the cooling system. The fact that both cylinders are now firing is a good sign. Check cam alignment once more. Set the cylinder to top dead center on compression and retest with your air line. Let me know if you are getting any bypass.
I ran another pressure test (I did it correctly this time) and the pressure is actually 140psi but there is still a power loss. I than ran 20psi of air from the spark plug at TDC and there is no leak from the intake or exhaust but there is an audible air leak from the crank case. I would normally assume that means the piston rings are gone but there is now a loss of coolant in the radiator. Is it possible that its just a head gasket failure or am I seriously looking at a top end rebuild?
The leak into the case would suggest the ring seal is not all it could be. This leak is not due to a gasket failure. I think I would bite the bullet here and get the job done. Have the valve seats on the head recut and blend them to the ports whilst you're at it. You could spend a lot of money on a full port job but 90% of your gains will come from blending the seats and cleaning up the short turn radius. It will be like a new bike once done.
Alternatively you could just replace the gasket for now and do the rings at a later date.
Your'e right... Got a quote of $1500 (2k with cylinders) for a top end rebuild. While thats better than i expected its cash I don't have at the moment. The bike is rideable but I don't want to push my luck and make things worse. Fingers crossed i get a decent tax return...
And yes a bent valve would be ideal given the current circumstances
check on these boards for an engine before you check ebay.
also, when you did your leakdown test was the engine ice cold? you can't expect a cylinder to seal perfectly when it's cold and hasn't had oil sloshing around recently.
i suspect your healthy cylinder would still let air past the rings when cold. they aren't a perfect seal, simply a seal based on the instantaneous pressure change. you can turn an engine over very slowly with little compression resistance for this reason.
when you say the bike is down on power is it still operating smoothly? is it stumbling at all? there are a lot of things worth checking before deciding it's game over
The leak down test was done about 45min after ridding so warm but by no means hot. The engine runs with no misfires or stumbling since i installed the new shims but there is a significant loss in power, specifically torque. What am I overlooking or have yet to investigate?
Before we go further....did you re-check the cam timing?
Also...you know you have a decent seal on the rear cylinder. Put the air line on that cylinder and listen for noise through the cases as a comparison. You will be down on power from a gasket and you did note that you have lost coolant.