Hey Chris,
The oil drip and smoke from your KX is one of three things I can think of without having the bike.
If you are riding the bike under half throttle most of the time, the unburnt oil from the combustion process is collecting (or condensing) in the pipe and getting blown out the exhaust. One reason the oil is not being consumed is the quality of the oil and the 32:1 premix ratio.
Check your Clymer for the Brass thing on the top of the carb. it will tell you what it's for . I'm guessing it's there to adjust slack in the cable, is it Knurled?. when you twist it it should unscrew from the top of the carb and if there is no slack in the cable it will start to raise the slide and Idle speed.
The carb on the cb 400 that keeps flooding either is just set too high or more likely is leaking fuel past the needle valve.
One cause of the black sooty plug may be the oil leaking past the valve guide and being drawn into the combustion chamber or poor ring seal, oil is being drawn up from the crankcase or not being kept in check by the oil control rings on the piston. There are some tests that can be done at a dealer to help trouble shoot the issue by using a vacuum or leak down test similar to checking a two stroke for an air leak.
http://www.carcraft.com/techarticles/116_0406_cylinder_leakdown_tester/viewall.htmlThis is basically the same for a bike or lawnmower engine or auto.
Then you said "when my friend rode it, he pulls in the clutch, clicks down to 1st gear, gives it full throttle gas, lets go of the clutch, and it has barely any power at all even with full throttle."
If the bike is screaming at full throttle and not moving in first gear the clutch is fried.
This bike is going to either wait until you gain some more experience or sold as a parts bike.
The carbs sound like they need to be re-built and the engine and clutch may need to be re- built from what it sounds like. This is not gonna be an easy fix.
Best of Luck Buddy and Hope you have a Happy and prosperous 2012!
Tuck\o/