Kaw uses a stainless steel head gasket and they're prone to leakage. The gasket probably blew letting combustion into the cooling system and forcing it out the pressure vent up near the cap. Remove the head and look for streaks across the gasket, then look at the edge of the bore and combustion chamber for errosion marks. If you see metal damage, then the parts will need to be resurfaced to remove the warpage and clean up the errosion damage.
I prefer to use YAMABOND gasket sealer on steel gaskets. Just a very thin coating on each side of the gasket seems to work best.
Good luck, Eric