did you pre-lube the cylinder with some 2 stroke oil befor you cranked it over for the first time? how much clearence is there between the piston and cylinder. does it sound like the piston is hitting the head, or just ratteling around in there, or does it sound like a noise from the bottem end?
do you pre mix or is it still oil injected? if its oil injected maybe your pump is shot and its not getting oil up top. if you pemix and your doin a bench test with the engine out of the bike make sure you have sufficient oil getting in the cylinder or it will seiz up. did it start making the noise as soon as you started or did it get louder as the engine got hotter?