so a bit of an update, installed autolite plugs gapped at .020, changed timing to 1.8 (.070) and no start, but it backfired a lot more out the exhaust! Sooo I put it back to 3mm, fired with a half kick.
Now here's what I noticed, I've fired it up cold a few times and even though sometimes it takes a few kicks but it does start and seems to run great, tuned the mixture screw a bit, idles nice, snappy response. Took it up and down the driveway a couple times , got the the farthest point and died of course, again almost like it ran out of fuel. Not an instant off like ignition shut down, just bog,bog,bog,died. Fired it up with some trouble got it back to garage.
When its warm, it is really tough to start, plugs wet, nice blue spark, kick and kick and a pop out the exhaust but no start.
Today I was thinking maybe a case leak or other leak when it heats up? So tonight pulled the motor and will pressure test soon. Thoughts on this??

There is a port on carb from inlet where fuel line is connected to the inlet valve. This port is known to get clogged up. IF your floats are correct and you have a fuel supply, this port may be blocked. At least sounds like you are running out of fuel after start up.

As mentioned, is idle fuel jet clean?

Also, is needle jet clean and small port in venturi behind slide open? Spray some carb cleaner w/that little red tube from inside the carb in to the hole. That is where the fuel mix exits. it is small and may be plugged up.

If you have an ultrasonic, give it a sonic cleaning. I think is too early to yank the engine, but don't me stop ya!

I'm still wondering exactly where you found that 3mm spec, if you have the advance wedged open when setting, and how you're determining the piston position when setting timing.  

Backfiring out the exhaust is usually retarded, not advanced and 3mm on that bike if you have decent compression will usually hole a piston under load.

So speaking of advance and retarted, I feel a bit of the last. The 3mm is the suggested roll back, I assume to get rid of any possible back lash, the to 1.8mm BTDC.
As per the instructions, find TDC, roll in opposite direction of normal travel,CW,3mm then roll in normal travel,CCW, to 1.8mm BTDC. At that point, points should be just open. I am using a dial indicator to find TDC and the continuity check on my multimeter to tell me when points are open/close and am holding advance weights open. 
Even though I am sometimes clueless and have the timing wrong, could that induce the symptoms I have where it would not start after a warm up period?
Still egar to learn these 2 strokes and again would love to sort this out for my son and move on to a christmas project I recieved of a 1973 Kawasaki G4TR.

Did you ever connect your voltmeter to the battery and check the voltage with key on while trying to start?

On the battery models if the key got left on, sometimes the ignition coil fries and acts up.  Often it will even melt the plastic.

I think you said you "checked" the condensor but that would be the first part I'd replace with your symptoms, good battery voltage, and no signs of overheated coil.

coil is new although aftermarket. Voltage when running was 12.8, maybe a tad low? I will replace condenser, I think there's a spare.

What is the proper way to check a condenser?

There have been a lot of issues reported with aftermarket ignition coils.  Many are bad brand new.

They make condensor testers, I've never had one.  I replace.  I have had bad condensors allow the bike to start but backfire and not want to rev at all.  

Your voltage is fine.