GasGas 125 power valving binding up

You may need to remove some material from the power valve.

Remove the power valve, mark it with black marker, reinstall, rotate power valve, the black marker will show where it's catching.

Stiction in the side arms is a common issue.  There was even an Australian company (F1Moto) selling aftermarket arms to address this.  You can usually fix it by being very careful with assembly, putting some 2-stroke oil on the side sub valves, and polishing or sanding the stock arms.  If you search "KTM power valve arm" on this forum you'll find a bunch of threads talking about it.

I think F1moto are out of business.

Not sure what year bike you are working with but it is a very common issue. You can try polishing everything up but I ended up just including new barrels and arms into every top end i did on those bikes to take care of the issue. The parts used to be cheap so only added like $100 total but last time I went to get the arms they like quadrupled in price. Replacing those parts was the only way I could ever get rid of the binding

Mxa did a test of 3 KTM150”s built by world famous Socal engine builders….on Varners, engine the powervalve was stuck open the entire time they tested it….but it was all good anyway….👌

I’ve had this problem only with my 2016 150SX, my 2016 125 has never hung up when operating by hand. I polished all arms and barrels, and then slowly started taking away material from the arms and barrels until I got it as smooth as the 125. Polish the control flap for the PV as well as that plays a huge role in the function. Use two stroke oil on reassembly. I always polish the manifold where the barrels ride as well. Can’t hurt it. 

Rag in airbox

You're definitely not too rich to start and run with that jetting, especially with 32:1 (leans everything out just a touch compared to 40:1).

Does the bike have good compression?  Is the plug wet with gas after starting attempts?

I would pull the pipe and get a good look up the port just to make sure nothing weird is going on.

More oil equals less gas. per volume.   So, a Richer oil-gas ratio creates a leaner gas-air ratio.  An easy way to think about it...  a jet is a fixed size orifice that flows a fixed volume per time.   If more of that liquid is oil, that means less of it is gas.  Guys will try to get more complicated about it and tell you it's because of the different levels of oil altering the viscosity of the liquid and hence the amount drawn up by vacuum, but just trust my way !  haha  It's not a huge difference between 40:1 and 32:1, but it is a difference.   This is why amateur mechanics try to address muffler spooge by putting less oil in their gas and end up making it worse.   Less oil means there is more gas.  More gas richens the gas/air ratio, cools the combustion temps, and makes more spooge.

Anyway, sound like you have a fuel delivery problem if your plug is staying dry.  Have you verified all the simple stuff?   Petcock is on, lean the bike over and get gas flowing out the overflows.  Tap the float bowl with a screwdriver handle to make sure the float isn't sticking closed.  Crack the bowl drain loose to make sure gas is filling the bowl.   You can also take the air filter out, hold the throttle wide open and spray some ether starting fluid in the carb and make sure it will fire.  It might run after that or you can then figure out why it isn't getting fuel.

Those scratches don't look major.  Can you feel them with your fingernail?   The concern is there may be other debris in your bottom end that will continue to migrate when you do start the bike.

Why did you rebuild? Replated cylinder or brand new? if replate, did you follow cleaning instructions? Scores on intake side of cylinder usually from ingesting dirt/sand…airbox boot & carby clean? 

Why did it blow up?

This….bottom end inspected? Throughly cleaned of debris? If it blew up from sucking dirt…..did you throughly clean…everything from reeds back to airbox? You should also do a leakdown test to make sure no air leaks….most guys without experience rebuild the bike but don’t fix what caused the seizure in the first place…..we all been there…. When I was 14 I blew up my CR125, new top end & cylinder……blew up again….lower rod bearing was going out….hard lesson learned for a kid on a paper route budget….

Make sure bottom end is clean of debris and do a leakdown test…make sure no air leaks…good luck