Quick version made long (copy/pasted from Acadiana 400 thread
http://www.twtex.com/forums/showthread.php?t=118283&page=2):
First off, I again verified spark and fuel - I tried a little starting fluid, new plug, etc just to confirm. Still no go, so I decided it was way past time to do a spring cleaning.. I pulled everything off except the radiators, wiring, and engine so that I could clean up some of the wiring and clean the bike in general before pulling off the valve covers, etc..
It was during this that I discovered what is likely my root cause... The KLR airbox has two drains. One on the dirty side of the airbox, and one on the clean side of the airbox. The purpose is for if the airbox is filled with water, gas or oil, you can get it out. I have never noticed that there was a drain on the clean side.
The drain on the dirty side has a very short rubber piece that will open when you squeeze it to let fluids out. I've seen that on many different bikes.
The drain on the dirty side has a hose that goes down to the bottom of the bike and the hose has a plug in it. Or at least it does when Kawasaki sells it. I have no idea how long mine had been gone, but I just had a hose hanging down under the bike sucking dirt and water into the engine. Yay! Due to this,
I also had about 1/8 or so of dirt caking the inside of the airbox, on the clean side of the air filter. No clue how much has gone through the engine.
So - first things first, check valves - both intakes are out of clearance - one is really zero clearance, the other is not touching, but I can't fit any shims in (I could tell it isn't touching because I could rotate the shim underneath it.) I had a couple of shims and was able to rearrange things enough to figure what sizes I needed to put things in spec, so I ordered up some shims.
Got those in, buttoned it back up, and I got it to pop a couple of times, mostly with starter fluid, and not even close to running. Time for some actual diagnostics...
The KLR has an automatic decompressor built into the exhaust cam, so a regular compression test doesn't work very well. So I bought a cheapie Harbor Freight leakdown tester.
Set the piston at top dead center on the compression stroke, hook up the leakdown tester, and pressurize the piston. You get a readout of what % of the air is escaping. If you are losing much, the next thing is to determine where it is going..
In order to tell where it's going, you have to listen/feel (or I've read to strap a rubber glove over the openings). If the air is coming out of the exhaust port, you have an exhaust valve problem, out of the intake port (carburetor), you have an intake valve problem. Mine was all coming out of the oil fill hole, which means I am leaking past the piston.
Turns out the rings were stuck in the grooves on the piston and were not able to expand, therefore not sealing. Unfortunately the cylinder doesn't have any crosshatching and needs to be cleaned up prior to trying to reseat rings. Since I'm in there and need a head and base gasket anyway, I have ordered a full set of rings, exhaust header copper gasket, and a ball hone to clean up the cylinder. There is no damage, just need to cross hatch it again.
Also - I have a simple rubber cap on the airbox drain now. If I need to drain it, I will just pull the cap off. I don't need the convenience of an easily accessible hose hanging under the bike.
My guess is that I had a lot of buildup on the piston/rings from sucking dirt in, and when a little water was ingested, it got loosened up and wedged into the ring grooves on the piston, sticking the rings in place. It's probably not a bad thing that we couldn't get it started- eventually it would've done damage to the cylinder, piston, or both.