Has it gone the whole hog & pushed the otherside seal out.
Could start fluid cause an explosion in the crankcase.
I guess timing would need to be way out like a broken flywheel key for that to happen.
Unless it'd already happened from being old & soggy--like me!!.

Used a nice Snap On Compression Gauge to get the 112psi. Cold engine and the throttle was closed, so a warm engine with the throttle open should have given us a bit higher reading. The bike won't idle, won't run after the three mile trip where it shut off again. Petcock was removed and cleaned with fresh gas and blown through with compressed air. Any rust that still came through was cleaned off with a tooth brush from the screens. May do new points after I pull the side cover and flywheel off again to see if the left side crank seal has stayed put or not.
He still has the fuel filter on that was on with the rusty tank; I'm really suspecting it's starved for fuel if the crank seal is still in place.

No excessive smoke when it was running and the transmission is still full with nice clean looking oil, so I believe the right side crank seal is still in place. Flywheel and it's key are there and in the correct position. When we sprayed Starter Fluid into the cylinder it didn't run, didn't even pop, so I doubt there was any explosion in the jug.

Just FYI, my nice (and very expensive) Snap On compression gauge reads the lowest of the gauges I have on these two strokes.  On a DT50, you can't even get 50 psi on the Snap On gauge which means it shouldn't even run.  I installed an NOS top end I found on ebay and still had 50 psi and ran the same. (at 49cc it doesn't have a lot of power but it will get me up to 55-60 mph which isn't bad)

Use caution when using a compression gauge to evaluate.  Best thing they are good for is comparison.  Has 112 psi now and if in 6 months of riding *with the same gauge* you only have 90, then it sounds like time to refresh.  

You can also compare bike to bike.  If you have a DT250 that reads 120 psi with that gauge and try another DT250 and it has only 100 with the same gauge and technique, that might tell you something.

Most common causes for "won't idle" are a clogged pilot jet (#1 by far), timing not set correctly, or air leak.  

Sounds like you have a tank rust problem and somehow little specs of debris seem to find their way into the pilot jet past the filters sometimes.  You might need to clean the carb multiple times.

I may have missed some details in the reading so forgive me, have you pulled the petcock and cleaned the filter element and checked the rubber seal, even a poor petcock rubber washer can upset these bikes. Other cruel issues like a crack in the HT lead can throw you off for days. Dodgy connection at fuse holder etc etc. As above seems like you are making progress. (not to throw you off course but on my bike I was very hesitant to move the needle but ended up putting it on the richest setting and it runs superb but probably nothing to do with your problem)

MarkT, compression check was really just to make sure it had some. I do realize the gauges aren't all that accurate on small displacement engines. At 112psi it still should have popped, but wouldn't. Ha, this was way past little specs of rust, the carb bowl was full of rust, when dry it was powder, so could have gotten everywhere. The original pilot jet still had what appeared to be a white crust inside even after an hour in the ultrasonic cleaner, the denture brush and brake clean appear to have removed all of it, and that jet was reinstalled. That jet was in when it finally did run for a bit. The rusty tank has been replaced.
I can't find anywhere obvious where air could be leaking. Brand new, correct, air filter, clean and in good shape rubber fitting coming off the air filter to the intake side of the carb, I applied a small amount of grease to the float bowl gasket, the carb o-ring to the intake manifold and to the gasket between the intake manifold and the cylinder, this gasket is tight to the cylinder and I didn't mess with it other than the small smear of grease on the intake manifold side. As stated above the cracks on the intake manifold were to the outside of the bolts attaching the carb and now have silicone in the small cracks.
REED VALVE RICHARDS; petcock has been cleaned and the o-ring sealing it to the tank has had a bit of grease applied to make sure it's sealing tight, the petcock and gasket are new. There's no paint on the tank where the petcock attaches and the metal there is in very good shape, fuse and its holder have also been visually checked. The bike had been running well with the clip on the needle at the second position before it decided it didn't want to run.

Only spent a short time on the bike this past weekend with no success. New fuel filter installed, left side crank seal still secure and the bike has spark. Still wouldn't fire. I'm still thinking a fuel delivery issue. Going to pull and disassemble the carb and run it through the ultrasonic cleaner again along with the petcock. Perhaps soak Evaporust in the replacement tank to make sure there's no rust hiding inside it.

It'll be a couple weekends before I can get back at it, the wife and I are going to be away for a while.

Blimey i wish i was there, it's going to bugg me until its sorted.
Need reasonable compression, a crank seal in place on both sides.
Spark happening in the ball park btdc, not a perfect setting for now.
Don't even need a carburettor or exhaust to get a result but if you spray stuff in the inlet like i have you need a way of stopping it although with a quick spray it'll only fire up & stop anyway.
Unless its got a case full of fuel & fires up then it'll give a rev untill the fuel in the case is gone.
Ok Ignore that stupid idea that i do sometimes but could still do it with the carb in-place & idle backed off so if & when it fires up on spraying WD40, or--CRC5-56 as i use-- at least you can close the throttle & it'll stop.
Here's a video of mine from way back starting a Barn Find but only a 100cc so easy to spin with the drill.

How do you keep the mag nut from coming off when spin starting with a drill. I wanna get my fresh bore DT2 fired but i gotta knee injury and cant kick it

I assume that if your flywheel nut is torqued to the proper spec then it won't loosen up from spinning thru compression. The torque spec is quite high. I believe it's in the range of 50 foot pounds. I've done it successfully on several bikes, but be careful. You gotta get the socket pulled off as soon as she fires up. I use a 6 point socket and it pulls away as needed.

Compression with a cold motor and throttle closed 112psi.
Left side crank seal in place, figure the right side is still in place since minimal smoking (smoking like a 2-stroke should) and there's no transmission fluid loss since running.
Decent spark and we've not messed with the points or timing since it had been running strong. Yes the points did have oil on them last weekend from the left side seal popping put, but I cleaned them off with brake clean and wiped them a few times with 500 grit paper.
Owner sprayed starter fluid in through the carb, still no start and I sprayed it directly into the combustion chamber through the spark plug hole and still no start.
We did try to turn the flywheel with an impact gun to get it started, but it just turned off the nut. The nut was torqued past 50 foot pounds I'd believe from the impact gun tightening it. We tried the impact gun because I was getting tired trying to push start it LOL! The flywheel is recessed into the crankcase on this CT1C unlike my DT2 and I cant get ahold of the flywheel to hold it still you use my torque wrench on it.