Thanks guys. I appreciate all your advice. It was a hell of a deal that I just couldn't pass up.
The only thing I'm not getting is the original HM 341 exhaust. He wants to sell it separately. Tomorrow I'll try to offer negotiations. I get the impression that he wants a bit more than $300 for it. Regardless, he does want to sell it and I told him that I would post it here. I'll let you know what happens.
As far as the frame goes, I'm going to check it out with a buddy of mine and see how bad it is. I'm all for a frame swap, but like Larry said, in this area finding a 75 frame with a title is near impossible. I do have my titled K7 frame sitting here, but that would kill the whole idea of having a 1 owner K5 that is for all intents and purposes a survivor.
I think the water got into the frame via the Windjammer that was on the bike for years. If there was a pin-hole of a crack somewhere, the faring could have directed rain water right to it. IDK, for a bike that was so well maintained and garage kept, I can understand how this would happen. I try to get some pics of the frame rot. If I can, I'm going to lean towards welding. Stay tuned my brothers and sisters.