A couple of weekends ago I was able to source a parts engine that was mostly complete. Over the last few days I pulled my engine out of the bike. Using 2x4s and threaded rod I made a stand to hold the engine upside down. This way I could split the cases without touching the top end. The transmission gears and forks seemed to be fine. What I found was that in the gear shift linkages behind the right cover the stopper holding the drum, gearshift assembly was bent outward. This was allowing the assembly to slide left and right. I have not reassemble the bike yet but I have a feeling the bent stopped was not forcing 3rd gear to hold position.
In the attached picture the yellow mark is the stopper linkage and the red mark is the drum, gearshift assemble. The stopper linkage was bent out allow the gearshift assemble to move.
Since I had purchased the spare engine I decided to swap most of the transmission parts as they looked to have less mileage then mine.
Hopefully I have found the problem....
