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UPDATE: I don't know why I didn't try this yesterday (I wasn't thinking straight being so upset at the situation)  I unplugged the wires going to the coil and hit the starter button and voila!  She turned over.  So hopefully all I need is a new coil.  I will order one and update what happens.  In the mean time I'm gonna remove all the plastic and inspect every wire and connection and replace this crappy looking green ground wire that runs to the swing-arm.

All fuses are good.  That is, if all the fuses are the ones in the front left behind the glove box, 4 of them.  Is there any fuses anywhere else on this one?

HOLY CRAP!  It just gets worse!  I was just double checking to see if I was getting spark by jumping the solenoid and the ignition coil literally started spewing goo and smoking.  SO, I'd say the coil is bad. Would that explain the starter button not engaging the starter? WHat does a fried coil have to do with the starter button not engaging the solenoid/starter?  I am so freaked out by this experience....one thing after another.  Aye aye aye!  WOuld the coil not being properly grounded to the frame cause this?  It was grounded SLIGHTLY by the small green/tore-up wire attached to the swingarm...but it's been running like that for a while.

The job is done, not the way I'd like to have done it, but it'll keep me on the road until I can afford to order a new clutch assembly, belt (the old one actually looks good but it's a bit stretched I can see it flapping a little too much when accelerating.  It has a Gates powerlink...is that the best kind for these cvt's?  I know Gates itself is a quality brand.  The clutch pads have some life left but I'm just gonna replace the whole thing in a few weeks so I don't have to worry about anything.  I'll check the variator slides too when I do that.  Thanks again for the advice, although it went well, the advice always helps with the confidence, knowing I'm not going it all alone and there are good people willing to help.  I think I'll photo document my future repairs so it could possibly help others out too.  Cheers! Happy to be rolling again (luckily without having to wait for parts!)
John

Awesome, thanks much for the help! 
Having Honda #s might help out a lot.  I hope the gears and axles are OK too.  We'll see!
I am probably gonna have to buy a bicycle to ride back and forth to work for a few days while I tear this down, then wait for parts.  I will have to ride a few more miles unfortunately until next payday, so I can get this handled.  Thanks again and I'll keep this updated with what goes on. 

Thanks again, good information!  I believe the previous owner JUST changed the gear oil cuz it looks quite clean.  (maybe he knew the problem and this is why he sold it) So I have no idea what weight it is, or if it was loaded with metal when he changed it.  I tried calling him and guess what???  "No longer in service"  ARGH!!!! Of course he didn't mention that he just changed it.  I didn't really do my diligence checking it out.  It was night time, very cold and I let the friend who gave me the ride to go look at it talk me into just getting it.  "For $800, so what if you have to fix some ."  I was like, ya!  Sure, I can fix anything anyway.....of course I should have known better.  My friend doesn't have to search for parts and PAY for them and have to rely on it EVERY DAY to get me back and forth to work etc.  I got hosed and now I know it.  The scooter has been treated ROUGH.  It appears to have been completely disassembled at some point because many fasteners and clips are missing, it's been repainted, the solenoid has been rewired and replaced and is just bouncing around next to the battery.  The tach only works about 10% of the time and it bounces around. 
Oh well, I will learn a lot working on this and a lesson in buying used Chinese scoots.  I am very knowledgeable in auto repair and parts, most of my working life spent managing repair shops and parts stores, so not much scares me....but it makes me a little TOO bold...I tend to always tell myself, "I can do that".  Which is true, but I don't WANT to anymore.

 I have found some EXCELLENT information from this site with Yamaha part #'s and diagrams: partsfinder.onlinemicrofiche.com/yamahagenuineparts/showmodel.asp?make=yamahasc

BUT, this is all for a 2005 and newer YP400.....but everything LOOKS the same.  I'm gonna try cross referencing some of the KNOWN part #s I found for the Linhai/VOG 260(170mm) and see if they cross to the part #'s on the Yamaha parts website.  If they do, this would make it much easier to find higher quality parts for it (the engine/trans anyway).
 partsatv.com Has diagrams w/part #'s, all chinese parts though and his prices are astronomical.  He appears to have a warehouse FULL of these parts in TX. But, I'd rather cross them and get cheaper, better bearing parts from NAPA/Advanced.

Another thought I am having now is that this could be the gears themselves.  I need to stop conjecturing and searching for parts I may not even need and just tear it down.  But then I'm walking for however long it takes.  I don't want to buy ALL the parts for the tranny, that would cost more than what I could buy another bike for, LOL!   I can't sell it without fixing it for what I paid, I wouldn't try to push it on anyone else like this, I just don't do that.  So, come what may, aside from a catastrophic failure....I'm gonna learn this thing and do whatever it takes. 

Actually I just thought of this, there's probably no way I'd see metal in the gear oil from bearings.  They are separated from the gear oil by an oil seal, wouldn't they be?  Scooters are new to me.