Still could be multiple things causing it to run like crap. Best to start with the cheapest and easiest things first as I'm sure you know from working on diesels. Carb adjustment and jets would be the first thing.
Link for carb tuning and jetting chart -
http://www.kxriders.com/forums/index.php?cat=9If the reeds have seen better days... When you pull the reed cage out there should be no gap between the reed petals and the cage. If there is any gap you can try flipping the reeds over but usually that doesn't help. I do know you can get a set of Boyesen reeds off ebay for around $40 shipped.
Hows the air filter? New, slightly old or 25 years old? lol
Might want to pull the flywheel and check the keyway and key to make sure it's not throwing timing off. Check the stator coil and make sure its not rusty as that will make it run like crap and eventually not run at all. If there is any rust you can use some fine grit sandpaper to clean it up. Also if there is any sludge in there the crank seals may be bad. Which would cause it to not have the vacuum it needs to pull the fuel up to the top of the piston to burn.
I'll keep thinking but I hope this helps.