Thanks again to Hugh at Hughshandbuilt I was able to remove the camshaft from the engine
The camshaft doesn't look to be in to bad a shape. The chain tensioner has some wear though, that's to be expected.
Looking at the cylinder head, the right side of picture is left side of engine and has rust and neither of the valves will seal on that side. I filled them with PB Blaster for a leak down and the fluid runs out freely from both exhaust and intake valves on that same side. Closer inspection after some cleaning, light can be seen between valves and seats
You can really see here that the head gasket was blown at the front of engine. I wonder how long it ran this way. Might have been an exhaust leak as well.
Close picture of caked on rust to left piston. Those rings are definatly toast and pistons are seized in cylinders. Here they are both getting a good PB Blaster soaking. Looking at the studs it's obvious the head gasket was bad; look at the heat discoloration on the center most front studs. Probably run with low and dirty oil as well. Can't be certain but looks like engine was running on one cylinder at some point as right piston and right side valves have carbon built up and left does not. Lots of speculation as I never saw engine running. A Yamaha dealer/mechanic would consider this engine a total loss and forget it. The cost to rebuild would be expensive.
At Wooley's though we take it as a challenge and, we WILL whip a dead horse.