Start from the motor... If the motor is shot then its not worth putting money into the frame and forks. I would slap it all back together, get it running, and see whats wrong.
Also, I have had two 85 125's now that acted like the trans was locked up when it was the rear end. Take the chain off, make sure the rear axle spins freely. If it does then it was probably in the sub-trans, the part with the hi-low range select. Those gears jam up sometimes. Also check the shift drum stopper, if thats broken it will cause all kinds of weirdness as it wont stay in gear.
Where you at in MN??
Manual link below....
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1984 Honda ATC200ES "Big Red"
1982 ATC200E "Hondie"
1988 TRX300FW "Project Quad" Still in progress....