Why not get a small engine shop to give it a compression check. As for the transmission, you should put in 20w40 oil. I use Yamalube, but I think I've read that WalMart sells it too. It should be the kind without the friction fighting additives ie. for wet clutches. Have you looked at the large gear that is on the shaft that the rear wheel is on? The last gear in the drive-train. I've seen a couple that are completely stripped out or on their way to that condition. Wouldn't hurt to give a second look to see if the gear teeth are meshing completely and properly. We'll get to the bottom of this..eventually!