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I'd remove those bolts from the rocker cover. They should all have washers underneath to protect the alloy as they are tightened. Plus the nuts don't seem to be tight as one nut seems to be coming off. The clamps the nuts are attached to resemble the things you used to get on push bikes to secure the pedal arms to the cotter shaft that ran through the frame. They were called cotter pins and were basically just slanted pins with a threaded end. If you do remove them and remove the shafts they are securing make sure you note which rocker arm goes where, maybe a tag saying inlet number cyl.1 etc.
Put the valves in a drill and spin them up, if they aren't straight they will show a slight wobble, easy way to check them.Check the end of the valve guide inside the inlet, see if you can spot any part of it missing, sometimes the valve bending breaks a small piece off. Other than that, get a new valve and see if it's a nice fit inside the old guide before thinking of replacing the guide, that will probably be beyond your talents at the moment.TBH I never measured a piston unless I was looking to see if it had been bored and oversized. The best way to check for liner wear is the piston ring end gap, aside from a visual inspection of course, if it's all scored it's safe to assume it's gonna need a rebore. However to measure the liner wear you need a new set of rings, by one set of standard rings, use those to check each cylinder. If they all come back inside the limits then you can just re-ring the pistons. Position the new ring at 3 points in the liner, low edge, middle and top but not the very top as that doesn't get wear, about 10mm down from the top is fine. If the liners are very worn you can usually test them by using a finger nail and seeing if there is a lip right on the upper edge of the liner, as the piston rings don't go up the liner that far there will be a ridge on the liner right where the liner gets worn and where it doesn't, run your finger nail up the liner and you'll feel the ridge, if it's a big ridge then the liner is worn and a rebore is needed, a thin ridge you can barely feel with the nail usually means minimal wear and no rebore needed.All that writing for something I could show you much better in a few seconds I strongly suspect the engine wasn't running when you bought it? I'm thinking that valve was stuck and as you turned the engine over it hit the piston, they usually bend much more than that if the engines running or you turning it over on the starter. I also strongly suspect you'll end up with a full engine out, you really need to clean that sand out of the bottom end and I suspect there will be additional stuff to replace on the bottom end, primary chain and dampers probably and camchain as well most likely.
Admittedly I'm way out of my depths...
I had a few engines where it poped out of 1st under load , both 500's - I'd sort it whilst you are in there f possible - on mine it took a year of commuting to get to the point where it was a royal pain, then it started doing it in 2nd too and I pulled the engine as I'm on a bit of a steep hill and it was getting 'not funny' going up the hill slipping the clutch in 3rd or poping out of gear and reving it's nutts off in 2nd every day.