O-Ring Chain on a YZ125

You need to make a countershaft spacer out of some sheet metal. I also believe that there are spacers that you can buy from most MX magazines.

Yes, it will throw your alignment out of whack.
Many folks have used a small washer or spacer to jack out the countershaft sprocket. This works, but make certain you are aligned as good as you can be when you do this. You will comprimise some chain life if you are out of alignment even a little, so weigh out if this is really what you want to do. The procedure makes me cringe, but lots of folks apparently do it.
A ring chain is great for use when it's completely sloppy, but for most riding a standard chain is fine.