Uh oh. Big boom.

So I finished some maintenance on my xs500 today. Adjusted the valves and counterbalancer chain tensioner and put on my own handmade (felpro) gaskets for the side panels. I got everything back together (except the front end...its off) and kicked it over (for some reason the starter isn't working. Wiring probably.) and it roared to life sounding better than ever, even with new pods on my CV mikunis. About 30 seconds into me revving a little no higher than 5-6 grand, a heard a loud pop come from the engine. It kept running with no hiccup in performance but I shut it off to be safe. I immediately fell to my knees and started praying in tongues then kicked it back over again. It took a few kicks this time and because the bars are off with the forks and everything else, I had to feather the throttle kinda creatively. It idles fine, BUT when I give it gas it blows smoke from somewhere in between the fins near the left exhaust port. The exhaust header is tight but I'm just remembering, I slightly overfilled when I replaced the oil. Would that have blown a head gasket? Would a head gasket blowing out sound like someone hitting a hammer against an engine? I'm scared I broke something but the motor purrs like a kitten! Im hoping the motogods heard my pleas...help!

P.S. big thanks to noexit for the valve explanation.

Yep, sounds like you blew a head gasket.
Time for a top end teardown

Maybe. But let me clarify. The smoking was happening before and after the bang. Same spot. I spilled quite a bit of oil when filling up and I cleaned up as best as I could. So I assume some of it was probably some of that oil burning off. But the smoking started immediately after I started it the first time. Still think a head gasket?

Backfire?

No it was definitely a mechanical bang.

Try re-torquing the head. If it still pops probably is a head gasket.

I'm going to try and take off the panels I put back on and see if it was my error there...maybe retorque the head bolts. Basically retrace my steps...I'll update tomorrow.

So I'm an idiot.
Turns out the exhaust bolts were NOT tight at all. I forgot to tighten those after I adjusted the pipes. So all the "smoke coming from between some fins" was just blowback exhaust from the loose header. Also, in my freak out, I probably jumped too quickly to the "mechanical failure" scenario and probably heard a backfire due to the whole fiasco. Lesson learned.

Yup - slooooooooow down and don't rev your engine to 5-6K in your garage. Never ever a need to do that. Timing it needs about 3000 RPM to get to full advance but there's never a good reason to go beyond that (other than it makes a lot of awesome noise and pisses of the neighbors!)

From now on, I will always pray to the motogods when something goes wrong on my bike. Thanks for showing me the "light".