Pull the magnetic sump plug and check for the dreaded filings....
I had an issue with a remade kickstart assembly fouling on the 1st gear and basket (only did it when engine was warm)
If you have filings you just need to look for the fresh shiney metal to tell where its coming from
good luck
Bob
strange noise in chain case!
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ForemanBob
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scoothappy
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the layshaft race was just the first problem i have found. magnet drain plug not too dirty but kinda. need to go through the box very carefully for other damage. building a lambretta gearbox from scratch, so much fun! 
thanks for the feedback.
thanks for the feedback.