WD wrote on 06/26/12 at 00:15:21:1. Check your oil. If it is filthy again and/or stinks, change it again. 2 quarts of oil and a filter are cheap. The clutches in these bikes aren't designed for running in funky oil, if it was real 1998 oil, you've got a LOT of crud to wash out of the clutch pack.
5. Re-adjust your clutch cable, they stretch. And if they get too out of whack the clutch slips. Fresh oil just makes that worse.
These two.
I had a problem with mine that sounds very similar.
I changed out to a good non-additive oil and adjusted the clutch cable. Pretty much problem solved.
I've got some slippage in high third and fourth gear but I suspect that will go away after I change the oil again.
Try Rotella T, 15w-40 and give your clutch some play with the cable.
It worked wonders for me.
I know it sounds crazy, but simple fixes really are most of what this bike needs from what I've found.
EDIT: With the backfire, have you adjusted your idle mix screw, also did wonders for me.