I picked up the bike yesterday. It seems that the problem may have been the TDU all along. The mechanic said the spring on the shaft did not have hardly any tension on it. So I got the upgrade kit, head gasket replaced, clutch lifter piece machined, and TDU replaced for $0, and the warranty was up in Feb 2008. I have spent most of my afternoon going over the bike to make sure everything is tight and set up right. Had to tighten a few things and add some more coolant. I really didn't get a chance to ride it other than in the neighborhood. It does shift better, no more missing shifts from 1st to 2nd, but neutral has proved to be a little bit difficult to find.
My output shaft bearing was installed backward but it was in good shape. Apparently the open side of the bearing should be facing toward the engine case as there is an oil passage way that lubes it. So I could see if someone was guessing which way to install it how they would put it in backward.... If it is installed backward, it still gets some oil splashed on it. That's probably why so many have survived. I read somewhere that there was no markings on the bearings. Mine had a manufacturer's name and a part number stamped on it.
I also polished the wheels today. Triumph didn't do the '06 and newer owners any favors when they stopped coating the wheels. What a pain in the ass. And Chip Foose is a liar, that Mother's polishing ball is a piece of ****.