3mm crank, no spacer plate. metalic tapping noise?

Also you could take the plug out and spin it over by hand with the flywheel...that should tell you if the crank is dragging
 
its still making the noise even with the plate so i dont think hitting the head is the problem. when i tried to use solder to measure the squish like was mentioned earlier the flattened part gave multiple measurements all over 0.045. im thinking either bad wrist pin bearing, egg shaped bore, or the crank is hitting the case.
 
It's very possible that the rod is touching the case just below the cylinder. The cases don't have to be trenched but you may need to remove some material at the top of the crankcase. Vito's advises this may be an issue do to the fact that Yamaha moves to crankshaft center line during production to make up for compounding tolerances.