I have tried swapping all gears out and the whole kickstarter assembly something is causing the little clip to jump out of its place which causes them to stay mashed badly and have little metal shavings due to it catching and staying meshed and then the starter not returning ect

Pictures or especially a video would help. 

Sounds like the gear is coming out too far so the ear on 17 is getting past the end of its guiding slot. 15 & 14 in the link are the stop that limits travel outward. So is your missing or damaged. Circlip holds the two half circles in the groove. In saying 'that' i think it was those that updated to the half circle things as early models had only a circlip & Mr Farmer with his big boots used to smack the circlip away so Yamaha modded it to what you see in the link. Might be wrong & it was 100cc farm bikes but same principle.

www.partzilla.com/catalog/yamaha/motorcy...973/at3/kick-starter

I bought a brand new oem clip and have tried multiple kickstarter axle assemblys

The way I see it you have a few choices... 

1.  Give up and park/sell/scrap the bike

2.  Continue telling everyone what you've tried and how it didn't work

3.  Post pictures and/or a video of what it's doing so maybe we can try to help you fix it. 

Does it only happen with the cover on?  I'm wondering if it could be something like you're not using a gasket under the cover or using a thinner gasket... 

The shim you mentioned making sure was there...  was it there when you took it apart or is it something you added? 

Probably something small but if engine ran backwards it could be the case got damaged or something and the stop is jamming the lever instead of stopping it.

In all of my workshop manuals for this and other similar and just a generic yamaha trail bike manual from that era all have the shim this is with the cover on and with the gasket once i have the time i will record a video and take photos i dont intend to scrap the bike at all it had alot of emotion value and in Australia atleast are incredibly rare

Is 15 & 14 in place as i mentioned. That's not the springy clip but a circlip holding two half circles. Look at the link in post #13. Photo of what you have would be good.