Sounds more like a bent or broken selector fork to me.Either way it's an engine-out, crankcase-split job to get it fixed.A second hand engine may be the cheaper option unless you do the work yourself.
Pulled the donkey out today and dropped the sump pan.......full of gear teeth I now want a complete engine and box, low mileage perfect condition and very cheap please (oh also nearer to Chesterfield, Derbyshire the better!)
Feel for you - 12 months since i had to do a gearbox rebuild...... On a brighter note here's one going cheap, gotta be worth the box.http://www.ebay.co.uk/itm/1999-YAMAHA-FZS600-FAZER-FZS-600-COMPLETE-ENGINE-GEAR-BOX-CASING-OIL-PUMP-/290687820266?pt=UK_Motorcycle_Parts&hash=item43ae5821ea
Purchased another set of carbs and it runs pretty well (at a standstill at least) but the tacho is now playing up - any ideas?
Try your throttle position sensor (It the wire coming of the side of the carbs) The rev counter does a trouble shoot program i think its up to 3000 rpm for throttle sensor. plug your old carbs back into it. If that stops it swap them over. its two screws. Make marks around the screws before changing the sensor is critical to the running of the engine. wrong place it runs like crap. Its easy to do take lots of pictures on ya phone before you start. Hope it helps.
Glad i could help see you on the mayday run with any luck.