Bodi, BenelliSEI, Tim2005, robvangulik, grcamna2 - thank you for your replies. I got a lot of joy seeing your responses. I wanted to only reply once I had a little update!
Since my post I took your advice and got some degreaser to see how well the black paint was prepped. I warmed up the bike, let it cool a so nothing was too hot and sprayed on an engine degreaser. I let it soak and then took to it with a hose (don't own a pressure washer unfortunately!). The result was, yes the paint certainly wasn't prepped well as some definitely came off even with the feeble water pressure I had available.
Here are some pictures mid cleaning/degreasing.



The plan now is as follows:
1. Adjust valve clearance
2. Compression test dry then wet to see if I need to new rings/cylinder hone
3. If compression is good then buy a pressure washer and use BenelliSEI approach. If they doesn't get it all off then take Bodi's idea of stripping the existing engine paint outside of the bike frame. Do the top end seal following this.
4. If compression is bad then pull down the engine and get the parts vapour blasted (my wallet is telling me "NO" already)
Now, in response to your helpful comments:
The front mudguard has been replaced, which is not a great idea as the OEM mounting bow is also a fork brace, and the 400 has thin fork tubes that rather want a fork brace.
Seat and bars are definitely aftermarket. If it's rideable, you may as well keep them? Likely you will need new control cables for standard bars, but maybe not. Seats are available from Vietnam (I think) but I have not seen one to vouch for the quality.
I had already thought about trying to find an original front mudguard as I didn't really think the one on the bike fits great. Your structural assessment is even more convincing than just thinking about aesthetics! I'm still thinking about which seat I want to go for; original or something smaller and more tidy. I shudder at the thought of cutting the rear subframe given it has lived this long without anyone hacking at it. I'm UK based and had a looked for a used example but couldn't find much - may have to go the DSS route.
Chroming aluminum alloy is a fools game, the electrochemical potential is extreme - doing it successfully involves multiple platings of different metals under the final chromium layer and is ridiculously expensive... and even then a tiny perforation from a rock strike or whatever will corrode underneath and the chrome layer peels off. It's OK for a show bike but for a bike that gets ridden ... no. I would look for a used clutch cover if I wanted to delete a chromed one: the chemicals that eat chrome also eat alloy (but much faster) - it's OK for steel parts but not for aluminum alloy. Chrome is much harder than the alloy so removing it with sanding is not so good.
Yeah it mustn't have been prepared well as I was sitting in the garage last night flicking bits off with my finger nail. Not sure if I'd ever get a result trying to scrap off the bits I can with something soft that won't gouge or scratch the aluminium like a windshield scrapper or whether I'd just end up with something more unsightly. Fitting a different cover is an interesting idea.
The black paint might come off with a pressure washer, and definitely will if you spray "aircraft stripper" on it first. But that stuff will take almost any kind of paint off almost anything, so the engine will have to come out for that.
Any recommendations for an "aircraft stripper"? I assume you are talking about chemical product not something else right...

I assume I'd have to be quite diligent in masking off any seals so they didn't get attacked.
Before digging in, try soaking the engine with a good degreaser/ “engine cleaner and then doing a hot wash with a high powered spray washer. Unless the surface was really well prepared, it’s amazing how much of the black paint may just wash away....
Is there a particular product you recommend? I just went to a local hardware store and got some generic automotive engine degreaser. I think with a pressure washer plenty will come off because there certainly was some that came off even with hose pressure.
That leak is easy enough to fix- just take off that cover and fit a new gasket, it's basically a big o-ring. What you may well find is that some of the threads that hold it down are stripped, make sure you have an M6 helicoil kit available & that's easily fixed. That whole job is do-able in an evening.
Stripping that black paint won't be easy without stripping the whole motor, I'd be tempted to add a fresh coat over the top unless you are planning a strip-down. As for the chrome plate on the covers, that might sand off, never tried it.
Thanks for the advice Tim2005. I assume even if I managed to strip all the black paint off that you factory paint needs to be applied or from factory were they just the bare metal with some kind of high temp clear coat on them? I guess you are suggesting adding black paint to the existing? To be honest the current paint is in pretty bad shape and appears to be have been painted within the frame so wouldn't be super optimistic about adding more black paint.
Any advice is greatly appreciated!