Hello, engine is finally in the bike after a rebuild. However the kickstarter doesn't spring back when kicked down. Could it be I have it in the wrong location, or is it that it has no oil yet? Thanks.

I would pull the cover and check to make sure it's installed correctly... before putting oil in it.

Ditto. In particular, make sure you have preloaded the spring and inserted the ends in the appropriate places. Check the manual. Probably one in the library, here.

I have a manual downloaded to my laptop, but I shall make sure it's installed right. Thanks.

Post up some pictures of what you find... someone might spot something to help.

I just took my second one down to reseal, so I’m familiar with how things should fit up. Can post comparative pics if needed.

I shall post pics up when I take it apart again. Thanks.

Unless the splined stop has come off the shaft & been put back on in the wrong position--unlikely. Does the spring hole go right through so you could fit it half a turn out. Or are you accidentally hooking the spring eye onto the wrong thing--which wouldn't be easy just thinking about it. Hope ya get it sorted. Have seen stops come adrift then the kick start moves forward so the owner moves lever back--do that a couple of times & springs unwound sort off. If this has happened it'll be obvious as the stop is likely split--but not common on older models. Happened to my 490 with the crap semi cast stop they used compared to stamped out steel of earlier yam's.

Should have updated this a very long time ago, so anyone with a similar issue can use this as reference: my homemade gasket was too thick and was rubbing against the kickstarter shaft. 

Haha, well there ya go. My notebook is getting fuller with problems solved that'll probably never happen twice.