This sounds like a worn out chain/sprocket problem. Is there any noise from the chain like it is binding. Does it bind when you push it by hand?
Try spinning the wheels and see that they are spinning freely. Bearing can lock up an spin in the hub causing major wear.
Just a thought.
Steve
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'84 XT600 is now bored to 2nd oversize and new OEM pistons and rings installed. No more smoking.
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