I've been plugging away at this for the last few weeks but it's still not in a good state. I learned that the crankshaft is out of true, both sides bent enough to cause the binding, and sent it to a machinist I was recommended. In the meantime, they also worked on the cylinder and ordered a new piston set. But, turns out that the connecting rod is also done for; too much play in the small end that would cause the piston to knock.

I'm very stuck at what to do next, since parts for the crankshaft would be about $400 plus ~$500 for the piston kit and machinist's time. I also still need bearings which are another $300, on top of everything else I've already bought for this thing. I'm not sure how far is too far in a project vehicle and would really appreciate some thoughts on the matter. I could have pretty much bought a brand new bike for the cost of parts/labor/my own time on this thing.

They don’t make old bikes any more.

It is never as much fun going in the second time. Especially when one needs to cough up cash to make things right. This is part of the experience of resurrecting an old, dead motorcycle. One takes some risk when they shell out a few hundred dollars. You just don't know if it's a bargain with a bad spark plug wire and all the costly systems functioning or if it was run until it's heart gave out with collateral damage along the way.

But that doesn't change the vision one has for the finished product. It becomes a test of one's willingness to invest to bring that vision into reality. It's true that all that money and a whole lot less fin-scrubbing-sweat-equity could purchase a newer, running bike. But it would likely be one that can't fulfill the vision you have for the XT.

I'm sure many (if not most) of us in this community have been where you are at least once. I personally have invested more in all old motorcycle than I could get back.I And have three more in que. But I didn't invest to make money. I wanted the experience of building, riding and owning certain motorcycles. 

I known I speak for others in this community when I say I  appreciate you sharing your journey with us. For those of us who have not dug into an XT before, you are educating us. It's unfortunate that we can't answer all your questions with multiple responses as would likely be the case if it was a DT.  But we would still like to see you win.

Len

Sounds like to me you have already started the rebuild. I say stick with it. You'll have a trusty bike once done. Also, don't overlook the valves/lash etc. 4 strokes are sensitive to lash.

If the engine is eating pasta, then what do the bearings/bushings in wheels, swing arm, steering, look like? Check spoke torque, brake shoes/disc pads, fork oil. New tires? What about tubes? The schrader's break down.