We managed to drill out the handlebar pinch bolt hole. Finding hardware has proven challenging as neither Home Depot, Cycle Gear, nor Lowes had a correct socket cap bolt. We ended up getting  a 50mm M8 screw head bolt and nut. Using the bench grinder I ground down the head so it would fit in the recess of the handlebar and used some locktight and a nut on the other side. We torqued it to 25nm. It's not pretty but it gets the job done for the moment.

The same bolt on the other handlebar also exhibited this strange instant grabbing and getting stuck problem despite the fact that we carefully used  a tap and die set to clean both the hole and the bolt. My best guess is that there is some weird metallurgic reaction going on. It's very strange. 

We added the correct handlebar alignment bolts which have been missing since I got the bike.

The rest of the front end went together fairly quickly without much issue.

There's a small section of the wiring harness that needs to be wrapped.

Sadly, there was no way to get the seal out of the replacement tube without removing the white inner tube. 

Attempting to remove the lower bolt resulted in the same situation we had with the other where the bottom of the tube just spins. 

Duncan suggested trying to tighten up the original and then drill it. I was skeptical, but we managed not only to drill out the bolt but salvage the tube. Coincidentally, I had an exact duplicate of the bolt on hand so we were able to replace the seal and reassemble everything. 

It looks like the oil sight glass may be leaking. It'll be something to keep an eye on.

We got the forks installed and when trying to torque the right handlebar something didn't feel right. When I tried to back it out it got stuck to a degree I have never before encountered. After stripping out the hex head we tried using a pair of vice grips but the metal gave way before the bolt would move. Again, skeptically, we cut the bolt with a dremel tool cutting blade which worked surprisingly well. Then we attempted to drill the remaining piece out which worked much better than expected. 

Worst case, we'll put a bolt all the way through with a locknut if we can't salvage the existing threads. 

So my thought is to not even try to remove the bottom bolt. Instead, I think if I take extra time I can probably just cut/tear out the old fork seal and tap the new one in place without removing the white plastic tube. It will be time consuming but my suspicion is that it will be less error prone than trying to remove the tube.

Hmm. The replacement fork arrived. Contrary to what I thought, it is the same kind with the white tube in it. The seal on it is bad but they included a nee seal and dust cap.

So now the question is how to proceed?

We managed to get one fork done. After much research, we figured out that the plastic tube in the fork, which is not shown on any fiche or mentioned in the manual, is in fact correct. We got the first one out without much issue but it looks like the second one, the right side fork, the metal endcap on the tube has come loose so we cannot get it out. 

Beemer boneyard has a right fork for $150 so I just placed the order. 

All my stuff is getting old.

I sent Tom Cutter an email.