Hi again folks.
I am making progress on the engine and am nearly ready to re-build it. I re-installed the old and now clean gearbox bearings into the crankcases and put the gear cluster back in and had a play until I found what the problem was. The gear change was locking and jamming, and the culprit was the end of the selector drum that has the single screw holding a large washer on.
The screw was not very tight and when I removed it, the side facing inboard was horribly worn or abused with a grinder of some sort but the little selector guide with the free spinning wheel was unworn and looked very good. The star type guide the wheel locates in at every gear change and is located on two pins seems to have been put back on incorrectly.
I could not find a new washer for sale, so I bought a whole new selector barrel. The gearchange is now smashing.
I had the head, barrel and the two-engine covers aqua blasted and the barrel and the crank are now in Armstrongs for boring and a crankshaft rebuild. I supplied the piston and conrod assembly from the MZ shop.
On the point of the re-bore is the book correct as to the 0.04mm clearance as it seems way too tight at 0.001574 " just over one and a half thousandth.
My arse will be twitching like a rabbit's nose at that clearance.