The shock on my dads XR 200 lost all the oil out of it. I took it apart and there were very deep scratches in the chrome shaft. We put a seal it about a year ago and tried to polish out the scratches, but I guess that didn't clean it up enough . That should I do to fix the shock. A new shoch is $700 or $400 for a works shock. I don't want to spend that much money on a bike that hardly gets ridden. The bike is an 1988, it has the adjustable shock.
Look and call around for a used shock. You should be able to find one for that bike pretty easy. I do believe the XR250 shock is the same in that time period. Post in the for sale/wanted area and someone can give you direction on where to get one.