I don't really see the problem with the blocks. YOu can see that they've done some work but as long as they keep the right shape they're OK.
The whole unit (part no.7 in the diagram at the beginning of the 1st post) costs less than $100. The reason you might want to do the repair using a spring from a seal is to save $90 for beer or to avoid having to wait for the new starter clutch.
I have to tell you that there was another KTM in Poland that has been fixed using this info and it works great. Maybe I'll get the guy to post here. Mine has been working great ever since the repair. I think it's a good way to go.
KTM 640 - The wheelie monster
Husqvarna TE 250 - The little beast
Husqvarna 333R - The ...umm..... how do I put it....