'I think' that type of baffle should have divider plates to direct the gas in & out until it gets to the end bit, but might be wrong. Also 'i think' that end perforated tube should have wrapping. I see a thingy inside the chamber in the diagram that i'd be removing. Then if i wasn't happy i'd start again & make a new chamber-- & i've made a few "cockups" but did some good ones in about 10 chamber exhaust when we were bucket racing. Then oxy accetylene got too expensive & i got too old lol.

Yeah wonder how loud it'd be if you did as you say & cut the baffle off to the end bit & wrap it with muffler stuff.. Be pretty noisy but not as bad as without., might be great.

Thanks RT I think I will will continue with the muffler baffle modifications first, seems easier to do. Also, I was pretty happy with the performance of the bike with no baffle. 
I can't wrap the baffle with packing before inserting it, but I think I can pack the muffler housing and then insert the baffle. 
As for the chamber, removing the the thing inside there will be the next step, if need be! I don't have skills to make my own chamber unfortunately.

Oh ok, so the hole is baffle size, was thinking almost the big flange size. Packing the inside is a great idea i'd not thought of. Is there a baffle plate in there that separates the perforated section, think i could see a mark where it sits, so packing would stay there, cool.

There is a baffle plate between the perforated and other sections inside the muffler. It's hard to see by its about 150mm from the end of the muffler. 

I decided to cut the baffle to 160mm long removing the weird indented bit and just leaving a perforated core. The core is not a single layer like I would expect in a more modern dirtbike. 
it has a smaller core inside the outer core.
I have added packing to the inside of the muffler too. Hopefully squeeze in a test ride later today.

Getting more interesting by the post. Look forward to the next installment.

Each change I make is a step in the right direction. Shortening the baffle has improved performance but still not as good as with no baffle. I am considering buying some 2 stroke muffler core and making my own baffle similar to what I would expect to see in a more modern 2 stroke.

Also considering opening up the chamber and removing what's inside there. 
 

Just bought myself a cheap mig welder new from supercheap autos, $199 down from $415 Is a flux core wire type as need to fix my RMX pipe split &others. But need to practice & realize an argon type wire setup would be best but anyway, practice makes perfect--or i'll give up haha. Miss my oxy accetylene setup but is too expensive hiring & filling bottles for very little use, although that might still win out in the end if i can't handle the new toy.

Slow progress here. Work and life got in the way for a few months. Today I cut the chamber in half and removed the internal baffle. I felt a bit sorry for the engineers at Yamaha that would have spent a great deal of time creating this! 
There is still another plate of some kind further in the chamber but it doesn't look to restrictive at all so I will leave it there. Now to pretend I can weld and try to reattach the 2 parts of the chamber.