need help with 1994 RM 125

Hey guys/girls- I just picked up a 94 RM 125 last night that I thought just needed a good tune up, however, the problem seems to be much worse. I have not touched a dirt bike since 88, so the tech has changed some and I need to ask those who know more than I :).

Basically the problem the bike has is it does not want to pull into powerband. It gets up to that point pretty well, then just stops- like a bog or something. Even in neutral, it will not rev past a certain point. Now the details- the bike has a newer piston and jug (previous owner) and has 120 psi of compression. I went through the carb and it is all cleaned up. Upon further inspection, I noticed the rod that attaches to the powervalve linkage and goes down into the crank case was disconnected in the case, so I tore it down and hooked it all back up. Still does it. I also noticed that it is puffing smoke/oil out of the large breather from the powervalve location. I took the cover off the valve assembly and all three retaining screw for the valves were loose/out and the powervalves were loose. Tightened them down and the problem persists. I wonder if it is possible the jug got burned around the powervalves from them being loose and they are now leaking or if there is some kind of seal/o ring on them that could have gotten trashed from them being loose. Or would any of this not cause the symptoms I am having? I would like to know which direction to look before tearing it down further. Should I prepare for a new jug?
Thanks in advance!
Joe

OK, after doing some reading here, it looks like 120 psi may be on the low side, my local shop told me it should be between 110-120 lol. I'm going to test again tomorrow just to be sure. I didn't think there was a compression issue, the thing starts on teh first kick every time.

Oh yeah, just thought of this- should also mention, the thing does not want to idle unless the idle screw is cranked all the way in and even then it is a bit low. I wonder if there is a leaking seal somewhere.
Joe

Anybody? Also- I was thinking, anyone think it may be ignition related? I forgot to mention that if I ride the bike, 1st and 2nd will not come into powerband at all, 3rd and up do a little with the extra load on it, but it still isn't pulling right and it sputters here and there.
Joe