Is that a steel clutch basket?
It looks in great shape.
You have got to use the proper sealer and less of it. ThreeBond 1194.
I have a bunch of KTMs, a 125, 300 and 380 and a 250 engine in a Blaster frame.
Even a 1990 is still a hot and capable bike and fully rebuildable.
The SEM ignition system was prone to occasional failure but if it works, it works.
If it fails you can swap in a 1997 or later Kukusan flywheel, stator and CDI.
I really like my 125, sort of a rider`s machine. Gotta be in the right gear to get the power out of it. The bigger engines are crazy powerful. KTM was way ahead of the game back in 1990 in both power, reliability and handling so if you have any riding skills at all you will be able to hang with your buddies on their new bikes, no problem. Shocks are rebuildable, I have an aftermarket oversize tank on my 125. IMS and Clarke make them, sell on Ebay. Pipes are a wear item, especially if you do rocks and log crossings.
Looks like it has newer upside-down front shocks on it. I actually like the pre-1999 style shocks. The chrome piston shaft is up by the handlebars and protected. The 2000-newer type has the chrome shaft down near the wheel and needs a plastic shock guard to protect from rock dings.
Cylinder is nikicyl lined, so if it is in good condition you just keep installing stock sized pistons. Tough stuff, as long as you run an air cleaner and don`t blow up a bearing. Most of the bearings in the engine are standard sizes. Look at the number on it and pick it up at a bearing suppliers, hardware or automotive store. KTM keeps a lot on commonality in its engine line, for example, with modification,s a 2013 300cc cylinder can still be used on your 1990 block. Most cylinders and cranks up to 2003 are drop-in. I do believe the engine mounts up to 2003 are all the same on the 250-300-360-380. KTM made some changed in 2003-2004 by shortening up the engine case and angling the cylinder, but most of the parts fit the same bolt patterns and will interchange. So lots of room to mix and match if you want to upgrade.
Good luck!
Steve