Tiny bits of metal will probably be found because as was mentioned in jay's earlier posts the bike is a 2000 but it only had a few miles on it.
During that stage of its break in a lot of shiny bits is pretty normal. At least it was on my 2011 G5.
Again, I don't own one of these older RE's but the lock up might be due to either the engine or the transmission.
If it works like I think it does, putting the transmission into one of the gears, pulling in the clutch and pushing down on the kick starter should result in the kick starter moving down.
Then, repeating this without touching the clutch lever probably will end up with the starter lever not moving.
Remember, the transmission must be in gear before doing this test.
If the kick starter lever refuses to move while the clutch is pulled in it would indicate to me that the transmission is locked up.
If the kick starter lever does move down with the clutch pulled in the transmission is most likely OK.
Jay said he was shifting from 2nd to 3rd so if the transmission is locked up it could be in two gears at once. Of course, I don't know about these RE's so maybe that is not possible but on many gearboxes if a shift yoke breaks so it doesn't pull one gear out of engagement with another while another yoke pushes another gear into engagement with another it can lock up the whole thing.
I am just hoping for something that might be pretty easy and pretty inexpensive to fix.