May the restoration begin!!

I think you might be right, I did not inspect since I would have to replace that gasket in order to do so. I pulled the trigger and ordered a new starter clutch as well. I figure if I replace both of them there is a good chance I'll nip this problem in the butt. Thank you for both of the diagrams you've put up, cleared things up quite a bit for me.

 

Well, it was the starter clutch, but it did not need replaced. One of the three bolts started to come loose and the bolt was binding on the inside of the clutch cover :/... I replaced the starter clutch anyway since I had one, but now I am leaking oil... crap... and I snapped two bolts off by over tightening... crap... I got one of them removed with an easy out, the other is going to take some work. I've ordered another new gasket, all new bolts, and a torque wrench which had I used the first time around I wouldn't have this problem. Any advice on the gasket to get the best possible seal? I thought about coating it with some white lithium or silicon rtv before putting it on but I don't want to end up hurting anything worse than I already have.

 

Oh, also, I learned a little trick to getting that main drive bolt off. The factory repair manual tells you to use a gear lock that sits in the valley right before the gears mesh. Naturally I did not have one and did not want to buy one, I took a wash cloth, rolled it up, put it in that valley, and started to turn the main drive. This locked up the gears then I was able to remove the bolt relatively easily, well as easy as removing a bolt tightened at 80-100 ft lbs can be anyway

 

Make sure the mating surfaces on your case and cover are clean and oil free and put a small bead of Yamabond sealant on the gasket.

This stuff works awesome for sealing up leaky side covers,oil pans,etc. I got it at my local Honda dealer.