what other mods can i get for my rm125?

How much money do you have to spend?

The next thing i could think of as far as motor mods would be porting or possibly a new reed cage. I imagine if it has never been changed this would help a lot. If the stock ones are still in it they are probably pretty bad. VForce and Boysene (sp?) are the two i hear about most but I havent tried either.

what are you planning to do with it? if you are only going to trail ride around just spend your money and time making sure everything is up to snuff. In my humble opinion you have a great bike but unfortunately 20 years of technology will never let it perform up to todays standards. Pay close attention to the wishbone shock linkage. Keep them cleaned and greased all the time them parts are getting hard to find and very expensive!
That bike was a very good bike in its time almost considered a classic! good power great rear suspension and one of<if not> the first production water cooled bikes. I had the good fortune of owning one of those back when it was almost competive and I loved the bike. Just keep it simple clean and well maintaned and save your money for something newer that you can easily get parts for.

well Iwould say that there is something wrong with your buddies yz 125 or with the way he rides ;)
the forks and brakes are nowhere near anything decent by todays standards heh but there are a few guys who swear that is the best production rear suspension ever made learn to ride on the rear wheel a lot and that bike just feels awesome!!!

150$ hmmmm I would go to something like aluminum bars with bark busters, radiator gaurds or a skid plate. Something along the lines that if you crash or something you can get up look at the bike and say wow that guard just saved me some money. You dont need a reed block for the bike<in fact I dont think they make an aftermarket one because the carberator is already straight into the cylinder> but new reeds you cant go wrong! I prefer Boyesen dualstage reeds but I cant really say why I like them better maybe its just the guys name Eyvind Boyeson man you just better be good at what you do with that name heh. Oh and air filters although real sweet to take out and clean but man they just freak me out I just never could be 100% sure if they were in right and not letting dirt pass thru.