My brother had my '86 300 Bayou out this weekend and said it lost it's power and smelled like something burning. He pulled over and I checked it and everything seemed ok except for what looked like a bit of oil leaking around the timing chain tensioner. I checked the oil and it was fine so we set out again and it seemed to be working fine. We put on another 50 miles or more with no issues (or so it seemed) but when we were a couple miles from home I noticed it smoking. It only has 1000 kms at the most since it had a top end rebuild and hadn't been burning any oil.
The next morning when I checked the oil, it had none showing in the sight glass and it took about 500 ml to bring it up half way in the glass. I tried to start it and it started really hard. Usually it starts on the first or second turn so I knew something was definitely wrong. Once it was warmed up, it started great but it was smoking when I revved it up.
I decided to take it for a drive tonight to try and find where it was leaking oil from so I headed up to my brother's about 4 miles away. It wasn't smoking too badly but it was a bit slower than usual. When I got there, it was obvious that the oil wasn't leaking but coming out the vent pipe attached to the cam chain cover and blowing back on the side of the motor. It still had lots of oil so I stuck the hose into an empty oil jug to keep the oil from spraying all over on the way home the way home and that seemed to make it smoke worse out the exhaust. It definitely was lacking power on the hill on the way home.
Any idea what may have let go? I'm leaning towards a broken ring. Hopefully I'll get a chance to do a compression test on it over the weekend.

 

Either a ring or the piston partly seized and nipped the rings. You are going to have to remove the cylinder anyway so you will find out then.

 

Could it be a blown head gasket?

 

Only if it blew into an oilway or the cam chain slot. Like I wrote above "You are going to have to remove the cylinder anyway so you will find out then."

 

I just tore it apart and the oil rings and middle ring are stuck to the piston. The piston is scuffed a bit too but the cylinder looks alright. I'd just like to know what caused it to sieze in the first place.

 

If you have just had a re-bore the machine shop may have "left it a bit tight" but the piston should have been "run in" at low speeds and may not have been, it probably just got a bit too hot. Check the gudgeon (wrist) pin hasn't seized too, though this is a sign of oil shortage as a rule.

 

It wasn't bored out the last time. I reused the old piston and new Kawasaki rings. The wrist pin slid out easily and I broke it in by varying the speed and never going full throttle for the first few heat cycles.
I'm going to pull the top off the carburetor and check for a torn diaphragm because it ran hot when the diaphragm was torn in it before, because it was running lean.

 

As I started cleaning everything up I noticed that the middle ring is broken. That was probably the beginning of the problem. The diaphragm in the carburetor was good so I can rule that out.

 

Old piston and new rings don't often work. Piston to cylinder clearance was probably too much to begin with, add the force of the rings slamming at the front and rear of the cylinder along with the friction and heat generated by this and rings can get eaten up in a hurry and piston seizes. It'll have to be bored now for sure.