Rookie help, smoke from gearbox, rubber boot burning. XJ650G Maxim

I'm pretty new to the motorcycle scene but got myself a 1980 XJ650 Special (japanese import) which I believe is the exact same as the XJ650G Maxim.

Was running great but noticed over the last week a few things
- Started struggling to idle, needed the choke more and more
- Slightly more violent lurch shifting into first gear
- Once there was a solid clunk shifting into first
- Then on the fateful last drive the bike was struggling to get over 20-30km/hr. When I got to work (my commute is quite short, maybe 2 km), I noticed smoke coming from under the rubber boot in between the gear box and final drive. One of the tabs on the rubber boot was actually burning. So I'm not 100% if the smoke was coming from the burning rubber or something else.
- Haven't driven it since, or turned it on (3 days ago)

I've got a mechanic who I usually go to (small town we only have one bike mechanic). He's quite busy opening a new shop though and I am trying to learn a bit more so thought I would post here before dropping it in the shop for a month.

I've changed a few things so not sure if my own tinkering has caused any problems..
- Put an original exhaust system on. The guy I bought it from had put straight pipes on it that weren't really sealed well at the elbow from the headers so exhaust was escaping there as well. Found out via the header wraps he had installed literally burning off..
- I have not balanced the carbs since changing the exhaust as my mechanic said I might need to. Bike seemed to be running fine for the month after changing the exhaust. Also I don't know how.
- Changed oil and filter. Pretty sure I didn't mess that up. (20w50 motorcycle)
- Did some work on the electrical system as the guy before me hadn't completely set up the aftermarket speedo he put on. Used a diode to set up the system so the indicator light would blink for both directions, got the backlight working, there is not oil light so that is just taped over, neutral light doesnt work I believe he grounded it on the bottom of the bike so bypass it. Haven't had time to change it back and not too fussed.
- Recently the starter sometimes doesn't do anything until being held down for a couple seconds, not sure if I messed something up in the electrical system or if its just an old bike

Anyway, up for suggestions and help if anyone has the time! Also happy to say I'm in over my head and take it to the mechanic.

 

Do you still see oil in the sight glass? I think it sounds like something heated up a lot and that would more likely happen if it was starved of oil.

 

Well, other than the idle issue, which is likley a carb problem, plugging up.
It sounds as though you have a u-joint on the drive shaft siezing up. It explains the heat, the clunking in gear and shifting and the struggle to get to speed.
Start by removing the boot for an inspection.

 

How much oil in the bike? 2.5 litre on average. Is it overfilled and leaking out the airbox onto exhaust and cooking the rubber boot? Or over full and pushed the output seal in front of the boot? Too much oil and extra pumping into airbox and soaking the air filter? This will make your bike die. Gas leaking past floats and drowning engine with gas/oil mix? And many more possibilities.

 

When straight up and down there is oil just under the top of the glass. 90% covered. I think I put in just under 2.5 litres after draining it. About the U joint do you happen to know where in the manual I could see a relevant picture? I'll remove the boot when I have a chance soon and have a look

 

650g manual
chapter 5 chassis driveshaft