Piston Slap? (Pics)

Looks to me like a 4 corner seizure. This is most commonly caused by inproper warm up, the piston will expand too quickly for the cylinder. It's possible the previous owner started it up and romped on it while it was cold. It only takes one time to get damage like that.
 
Not really a possibility on an XS, but on liquid cooled two stroke dirt bikes under the following conditions:

a very cold day,
a long tight woods section,
followed by a wide open high speed or road section,

it is very possible to have the engine seize. Here's the deal: while in the woods section you are constantly lugging the engine, using torque to pull you out of turns, etc. This gets the piston good and hot, making it expand.

Now when you come out of the woods onto a wide open road section, your first instinct is to nail it. Now you are zinging down the road at 60MPH and the very cold air cools the coolant off very quickly, this goes down to the cylinder which of course contracts around the still very hot and expanded piston. SCREECH. That's why KTM finally started using thermostats.

1947 Buick technology reaches the dirt bike world.
 
Don't know if anyone has mentioned this yet, but, while your jugs are off you could check for play in the Piston Pins/Crank Small End; that could also be a factor contributing to the damage or wear that could have show up due to the heat/damage from the Jugs/Pistons.
 
While we're on that subject, I've got a crank on the shelf that measures like new for free play on the right rod but at the wear limit on the left. Both bearings seem smooth and healthy. I hate to spend money replacing something that doesn't seem all that broken, what would you guys do?
 
That much damage could be from running with no oil or the wrong oil. What does the cam and rocker surfaces look like. I would check those rod ends and side play for shure.
 
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