Oh well... it's not all good news!
Tried the nuts on the headers and they were all pretty easy to unscrew (thanks for the WD40 tip!) almost felt like they hadn't been done up in the first place!
Well, one of them hadn't since the nut was missing! (See pic)
I didn't have one to replace it either but then remembered the bike came with some 'spares' under the seat! hahahahaha
Check the amout of crap it has in there! Thankfully there was a nut there too!

Note that one of the headers it is not actually a nut but a screw that holds it in place! Don't know if this is how it's supposed to be from factory or if it's something the previous owner had to fix:

So I fixated the headers properly, making sure I didn't overtighten anything. I started the bike and straight away the noise changed. It was much deeper and rougher than usual. The bike was struggling to maintain rpms. Then I noticed some dark smoking coming out of the muffler and it would increase as I rev'ed the bike... Not blue nor white smoke, just some dark grey stuff.
Then things got interesting. I tried to make a video out of it running and showing the smoke but he bike died and I started it again, idled for a while then died again. And same thing 3 or 4 times till it wouldn't start anymore. Now like I said I don't know much but I'm assuming from the color of the smoke that the bike was running waaaaaay too rich at that stage. It probably was rich before but adding back pressure to the exhaust didn't help. Any logic to this or does it sound more like I need an engine rebuild?
Then to make things better, I lost all power. No more oil light was the big giveaway. I was still puzzled as to why that happened when the light came back on by itself a few minutes later...

I tried to start the bike and almost got it going then lost all power again.

Gave up on trying to start it (I personally blame it on the carbs fouling the plugs - all based purely on... erm... a guess!) and decided to try and polish the rough bits so I could at least get something good out of the day. Most stuff actually comes out nicely, even though I'm only using a cloth... I'll bring the dremel out eventually.
Then more bad news, notice the top tree is cracked. Badly.

Forks look and feel straight (despite the obvious leaks) so I'm not even sure how it cracked.

Anyway, not the best day in my garage but I'm remaining positive that I can do this! The bike is fighting back but I'll go down swinging! hahahaha