Feel for compression. if I'm going too slow when I drop my clutch, my back tire skids from the resistance from compression in the engine. Can you feel the resistance? back tire skid, or just slowly coming to a stop, like dragging your feet. Probably the easiest compression test.
I can't speak for running out of oil in these specifically, but Ive seen quite a few 2 strokes survive without oil for a bit. No guarantee its shot yet. Ive had some really boned compression readings on engines that will still run. This is a fine engine to learn on, parts are cheap, operation is simple. You'll be a pro in no time and back on the road.
Best I can tell from your pic, is that someone used better hardware on your head, and maybe not better connectors for your magneto.
maybe I missed it, but regarding your choke... take off your air filter, have a look. You will see your choke. When "on" the intake will be blocked or partially blocked. FWIW, I have not needed to choke unless its <40 F As I remember up is off down is on.
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