Pre-gens have known issue with rubber centres on clutch disintegrating and causing knocking noises. Common upgrade is to replace with new-gen clutch.
https://www.ninjette.org/forums/showthread.php?t=259395
Blown-headgasket very likely. Best to get compression-gauge to test. Can rent from AutoZone for free. Then you'd know for sure before spending lots of time and money fixing it.
Another easy check is to see if coolant-levels drop. Remove overflow hose from and top-off radiator. Then run bike for 5-minutes. Let this cool off and verify you have milkshake for oil. Then check radiator cap. If level has dropped, you know where coolant went.
Good Luck!