your quite fortunate it's an 87, the power valves are easy to set, no idler gears to mess with. Pull off your exhaust pipe and the KIPS actuation cover. Look in the exhaust port the two barrel ports should be closed, meaning that the flow from the cylinder is restricted, pull the arm away from the cylinder, the ports should now be open. As far as noise, I always thought the K5 had the death rattle, even when new. The not running on top end, and assuming the piston and rings are good, (dangerous assumption) it sounds like a KIPS issue or maybe a jetting issue, I wouldn't think it would be a timing issue, but could be so you should pop the mag cover and make sure the timing marks are lined up.