Thanks for the replies. The carb is not an original. I got a new carb from Sudco. I have cleaned it. But I did not think about the choke. I will go back in and clean it again and inspect the choke as well.  I have not messed with the jets yet. It is so far from running well that I don't think it is wrong jets.  Chad, from Sudco set it up for the DT1 so it should be close to correct. I figured I would mess with jetting when I overcame all the other little pain in my ass problems. 

It seems like a plugged carb. It used to run well enough to ride then all of a sudden it went bad. I immediately went into the carb and cleaned it out, but I guess I should do it again. 

The condensor is the original and it is on my list of things to replace. Anyone know of a good alternative to NOS. I have looked but can't find. I am good with using a non-stock alternative if I knew of a good one. 

Thanks again everyone. 

I didn't realize it was a new carb & shoulda read back further. I guess it still depends on how well the fuel is filtered though before entering the carb.
Not a carb with an oil line fitting not being used, so still open to let air in.

I just got finished cleaning the carb out again and reinstalling the fuel filter. Long ago I did a thorough job of cleaning out the gas tank. I partially filled it with different size pebbles and built a tumbling machine and it did a wonderful job of cleaning out the old crud. I then put on a new petcock. The new petcock has a screen filter built into it below the valve. Recently I suspected that I was having a fuel flow problem so I pulled out the inline filter and had a short fuel line making almost a straight line to the carb...  The results are a considerable improvement. I'm still not happy but I may be getting closer..  something new is some slight "PAP" sounding backfire and a bit of smoke coming from the exhaust ring mounted to the barrel. I may need to tighten the bolts after I reinstalled it. I recently put in a new crush ring and this was the first time I have taken the exhaust mount off.  I have a new crush ring so if that continues I will install the new one. I'm going to move the clip up on the throttle pin to lean it out. I have been told that backfire out of the exhaust means too rich and backfire out the back of the carb means lean. I have had backfire out of the carb but never out of the exhaust. So that is new. I may also still be dealing with a bit of gear oil residual in the crank case.  I will post again later after I make the next changes. Thank RT325. You have provided me with lots of good insight and ideas. 

Have you ever checked the timing and ignition?

I have timed it by pulling the head measuring 3.2mm before TDC and then setting the points and gap. I am pretty sure that stuff is OK. I have a new coil and new points. The only original parts are the condensor and the magneto. I have a strong blue spark. Can you enlighten me on what effect timing and gap will have on backfire? Too advanced or retarded causes ??? Gap too big or too small causes???  That would be helpful to know. Thanks PMB. 

First off you're concerning me when you said you set the point gap.  Might be semantics but you never set the gap on your bike.  You set the timing and then check to make sure the gap is within spec range.

Bad condenser can cause all sorts of issues.  Should see excessive sparking at points with engine running if condenser is bad. (normal to see a little sparking.)

Since you haven't mentioned kick back and it sounds like it's backfiring in the pipe, you might have the timing retarded.

Thanks MarkT. I should have been more clear. What I actually did is determine where the timing mark on my flywheel was at 3.2 BTC by pulling the head and measuring the piston stroke. I then reset the timing tab on the magneto to line up with the mark on the flywheel. Then, using an analog VOM that played a veritable tone as resistance changes, I set the points such that just as the timing mark on the flywheel and the timing tab on the magneto lined up, the needle on the meter as well as the tone from the meter changed indicating that the points began to open. Please let me know if this is the correct procedure. Thanks 

That's kind of cool.  I've never seen an analog meter that plays a tone that changes with resistance.  What meter do you have? 

And yes, that sounds correct.

Thanks MarkT. Here is the analog meter I used. I bought on Amazon. I think it cost me about $30. I bought it specifically to set the timing on my bike. I have a bunch of digital meters but they just won't do this particular job. See the pics. What I thought was backfire turned out to be combustion leaking out from the bottom of the barrel gasket and from the head gasket. I forgot to properly torque the head bolts. 
I replaced the head gasket and added a thin film of Permatex to bottom of the base gasket. I then put the barrel and head bolts on and lightly cinched it down to compress the Permatex just a bit. After letting it sit over night I torqued the head to 29ft/lbs. The popping sound I thought was backfire is now gone. 
The bike still won't start easily and doesn't want to run correctly. I am going to replace the condensor and probably the rectifier and check all the magneto wires. I also need to check the points for signs of arching. One of these days I'll figure out what is causing the problem although I'm running out of ideas..

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