First there never was a upgrade kit it was called a update kit. which had a lot more then just the two gears in the second gear cluster. It replaced some shims and beleville washers. the complete out put drive unit, coil leads, plugs, timing chain guide and chain along with the gears and a new set of clutch springs. from my memory I will have to look to see what I missed when I get home.
So that being said I am wondering what they keep fixing and wonder if it is second gear are they ordering the old style gears instead of the new ones? I will wait and see what you have listed in the parts list because something sounds fishy here. Or like they are doing something wrong for sure.
I beat the crap out of my bike and have a wee bit more horse power then stock and have had no issues since the update kit went in except for when I exploded my internal clutch hubb and bent the tranny input shaft. But I have 10,000 really hard miles on it since then.
The PDF file below will help you