1988 Kx500 head studs

[Gage.Record]

I think I have an issue with my gasket but is it suppose to sit like this or does it need to be flush with the cylinder

[sandblaster]

I tried to answer your question on the pm but having technical difficulties.
That is not a 88 KX500 cylinder.
It is either a 86-87.
The 88 had straight studs.
The 86-87 had studs like your's.
If you want to know which year exactly it is, post a pic of the inside of the cylinder pointing at the main exaust port, but showing one of the side sub ports.