Well, Jeff and I met today, and we talked and share LOT in common, great guy.
Now for the disturbing news, Jeff's 500 definately had less compression than mine. His compression also took more kicks to reach a max of about 150 psi, where as my 500 reached a max of 175. First, I grabbed a flashlight, and closely observed the powervalves, and everything looks good, next Jeff is slowly kicking the bike over as I watch the piston, and te piston and rings look worn, then as I get my head even closer to the exhaust port, I focus on the piston crown, and the bad news is spotted.... The piston has a good sized chunk broken off the crown directly above the top compression ring... dammit, NOT what I wanted to see ! ... I'm sure he will chime in with his comments... I just hope there is no cylinder damage, and the head is ok.
In my experiences with a piston crown failure, it usually bangs up the head, and the cyl as well, lets keep our fingers crossed until he get the cylinder off.
Jeff post up pics of the piston, maybe some of the more experienced KX engine gurus can explain what might have happened to cause the psiton to break like it did...