You have at least enough tappet clearance, which in itself is good news, but either some amateur has tried to adjust the exhaust clearance and made a mess of it, or that valve is not closing fully. It would be a good idea to do a compression test, because that will give you quite a bit of information immediately. However if you don't have a pressure gauge and don't want to get one, you could remove the cylinder head and inspect the valves and valve seats. Healthy valves and seats have smooth, light or metal coloured seating areas. If that exhaust valve has a black seating area, and a black seat, it is not sealing and needs urgent attention. Removing the cylinder head is not wasted effort, because either the exhaust valve needs lapping or you need a new exhaust valve, one or other must be happening to cause that monstrous tappet clearance. The advantage of doing a compression test is that you could then repeat it with a spoonful of oil poured in through the spark plug hole, and we would know whether your piston rings are leaking.
Do not worry about the thread getting into detail, the detailed how-to threads are the ones that are most popular in our archives, and we have very little archival material at present on side valve Honda engines.
