First, welcome to the site and congrats on the purchase. As sully said the goal is not a showroom bike, but one that is mechanically sound and safe. Being mechanically inclined will help a lot, but the first thing you have to swallow is that owning a dirt bike (and not just an older one, as it applies to the new bikes as well) means spending money. The trick is to spend it where it does the most good. As for your specific questions heres' my .02$
throttleout wrote:1. How far should I take the maintenance on the rear suspension?
You HAVE to fix it. Period. It's a safety thing more than a performance one. All new bearings/sleeves in the swingarm/linkages. Just search the site for linkage and see that this is the most neglected part of these bikes. The old bearings can be pressed out in the home shop easily. Same goes for the wheel bearings, easy to do and worth every penny (and a recurring maintenance job). Just keep in mind that the rear wheel has a circlip on the sprocket side that has to be removed before you can drive out the bearing. For that matter you do have the most important purchase, right? Your manual? You can even easily rebuild the rear shock (depending on the year of your bike) at home with common tools.
throttleout wrote:2. Does the steering head bearings need replacing giving the small amount of play? I don't know if there's supposed to be no play at all or not.
There should be no play in the steering head. If there is replace the bearings AND the races. DON'T put new bearings in old races...just don't do it...ever...
throttleout wrote:3. Can I get by a while with out replacing the chain and sprockets? What's negative about them being worn?
Your chain and sprocket are showing noticeable wear, but would be the last thing I would spend money on if I were you. Did you remove the case saver, or was it not present? That would be higher on my list than a new chain. Lots of folks might just flame me for saying it, but the whole point of owning a dirt bike is riding it, and you can still ride with that chain and sprockets while you focus on repairing the bigger issues. Would be the top of my list for the next season for sure. When you do replace them always replace chain and sprockets at the same time. Plenty of info on the site about regular vs. o-ring, etc when you get to that point.
throttleout wrote:4. Will I notice the rim imperfections?
Depends on if they are affecting the trueness of the wheels. They both look like you may be able to apply some heat (with the tires removed of course) and persuade (read hit with a mallet) them back to shape. You will want to check them for true and balance of course.
throttleout wrote:5. Should I do anything to the top, and what would that be?
If you mean top end, that is a difficult question to answer without knowing a lot more info. Is it a 200 or 220?, How's it running? What does your plug look like?
throttleout wrote:6. What else should I look into?
A good carb claning is never a bad idea, especially on a new to you bike. New air filter, check the reeds. Ensure that your intake tract (air boot, air box, filter, reeds/cage, carb, fuel line/petcock/tank) are all mechanically sound with no tears, missing parts, etc. Same goes for the exhaust tract (all pipe mounts, springs, silencer drained/repacked, no major dents in expansion chamber). Check your oil to make sure it's not a milky color/consistency. Brakes are functional and in spec. If all that is good then ride the thing and work on the problems that come up while doing regular maintenance on the rest. Just don't do like 85% of people and fix all the cosmetic stuff first thinking that is going to make any difference. Ask lots of questions, search the site, read the forums...these are old bikes and just about EVERY question ever asked is in here somewhere!