Hey g29,
Well, what shape was that head gasket really in? now that you can see it in all it's glory !
ANY damage, or evidence of leakage, is just not acceptable here in the land of miniature horsepower. Basically, you're not starting out with much, on the best of days, and we sure don't want to give up any, at all!
What does the top of the piston look like?
If the motor is new, it should be in excellent shape, yet probably black, wet and sooty, from the story you have presented...
What do the cylinder walls look like?
Are they smooth and clean?
It's important!
Actually, the bad head gasket, alone , could cause all the results you have described.
How's your mechanical skills?
Do you know about lapping a head to the cylinder?
Lapping the mating surface is a good step in the right direction to preventing a blown head gasket. ...which you did say you had...
Blown head gasket can be the sole cause of hard starting, failure to idle, and lack of power.
It can also lead to over-heating and poor fuel-air ratio causing the piston to cook in the cylinder, causing further damage to it, the rings, and the cylinder walls.
IMO, pulling the baffles out of the muffler was not the best of ideas, even though it probably makes kool noise.
Drilling it out a tad would probably have been a better way to go.
Lack of any back pressure may have caused it to run far too lean, hotter, and probably a loss of power, along with accelerated wear.
I think ALf had a good checklist to run down for diagnosis.
You might look for that here on the forum.
And of course, Lord Vader has tons of great info in his threads!
Good luck
rc