I finally had the time to tear into this engine. It seems the previous owner made a mistake and installed the cam guide in upside down! My guess is he then installed that pin in the upper slot for the upper half of that cam chain guide. Therefore, it must have bounced out of the upper slot during assembly. I couldn't find any damage to this engine.
Not to sure what I bore scoped there, must have been the factory tooling marks in the cases. Anyway, everything checked out within specs. I had Preston re-do the head with new valves, putting in new std rings and hopefully I will have a good bike after assembly. I plan on doing an engine soda blast and re-paint since I have the engine out.
Does any one have any tips or tricks to a cyl/head install? Thanks.