I am working on a yamaha 250 virago for a friend and noticed some weird noise come from the area of the chain. After putting it on the lift, removing the covers and inspecting I noticed as I turned the wheel the chain appeared to tighten and the loosen as it moved around the sprockets. I removed the chain and cleaned it thoroughly lubed and reinstalled.I did not notice any frozen links.Still the same results Is it possible that the chain is bad or should i be looking at something else?  Appreciate any suggestions. thank you

chain and sprocket ages???chains streach and get bad links specially low $ type..sprokets wear specially when chain is TOO tight..
sounds like worn sprocket(s) just a guess, check for flaring (MUSHROOMING?)
check mounting of both sprokets only play should be lil front to back @ the rear
in the rear hub check the rubber isolators(if any) from the sprocket mount to the rear hub...one bad in the set could do what you describe
good luck post what you find
and remember this as you bust a knuckle "no good deed goes unpunished"just kiddin!!!
after re reading:  check number of links top of chain and bottom, both need to be equal from sproket to sproket (sprocket)

appreciate the advice. I think I am gonna start with chain and front sprocket since that is what I have been able to get my hands on so far. Probably should replace rear as well.I want to wack this guy on the head as the condition of the oil was as thick as sludge and the filter is probably the origanal. Bike is a 95 with 4900 miles on it and its a shame to see a bike neglected so badly.  I will keep all informed of progress. Thanks

That is normal with most chain driven bikes.  It will vary on the quality of the chain and power and riding style of the rider.  The chains typically don't stretch evenly and you get that kind of issue.  The key is to set the slack by the tightest point not the loosest.