By Nessism: I can't say for sure what's going on with your bike, but I do know that the wheel bearing bore in the wheel is deeper than necessary. If you drive in the bearings until they hit the shoulder in the bore, they will be too deep, and the bearings will bind.
Are you saying you don't drive the bearings in all the way? It seems like the bearing could then shift within the well. ???
I drove mine in all the way w no problems. but it's a 1981 KZ650-CSR.
Yes, that's exactly what I'm saying. For example, with my 750E, I drove the first bearing in until it hit the shoulder in the wheel. I then flipped over the wheel, dropped in the spacer, then started driving in the 2nd bearing. Problem was, I couldn't drive in the 2nd bearing deep enough to allow installation of the C-clip, because the spacer was already binding up the bearing inner races.
To fix the wheel, I had to buy a new set of bearings, but this time, when installing the first bearing, I only drove it in enough to get the c-clip in. The wheel was then flipped over, and this time the 2nd bearing was able to go in without binding up, and the C-clip had enough room for install.