Two things...
Firstly - 17 thou is a bit slack, but it doesn't explain all your symptoms.
Second may help, more of a story really.
Don't know if the same on the 350, but a few years ago a friend bought an XT250 from me, but he could never get it to run right after a rebore. Turned out that he was colourblind and had reconnected the ignition trigger wires the wrong way round, which resulted in it running on full advance all the time, red hot exhaust pipe and lousy running at low revs. It wasn't intermittent like your problem though, but it did mean I got to buy the bike back for less than I'd sold it to him for! maybe worth checking teh advance curve?
good luck
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