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Sounds like a plan (y) Ive not done one myself- so cannot advise.

Page 18- parts 15& 16 https://www.hlsproparts.com/v/vspfiles/downloadables/IPL-120-MARK-II-96786190X.pdf Or maybe this is better? https://www.partstree.com/models/120-mark-ii-967861901-husqvarna-chainsaw-2018-05/fuel-tank-handle-8/

Well- no, just guessing here as I dont play around with these wee rascals much- there should be a breather of some type in the hole with a nipple on the tank side that duckbill mounts to. Will see if I can find drawings.

It is the duckbill for the tank vent. Without it, air and indeed fluids are able to exit the tank- this should not be the case- it is a one way valve to allow air in to replace the fuel going to the carb.

That is correct- they do screw into the piece you have indicated. Photos are of a 2159- but exact same- you should be able to see the last threads poking through just before the rubber manifold.

Where it says in my profile- down the bottom of the South Island of New Zealand. You could have left, done what you needed to do and left the saw there- saying I am not taking a faulty tool, but I will be back to sort this out.

No idea, your American systems work way different to here and I have never had an issue with any local Stihl dealer way over here. Perhaps a wee bit lucky to get away with "well the manual doesnt mention overheating" thats operator error to me- but not having the saw in hand I guess its whoever...

20 on the drive links is Oregon code for .325 pitch- the rest you know- but for my mind it does not add up well running .325 on a 235e and at 72DL's you are out at 18 inch bar- so way overkill on that saw- in my opinion. Might work well for you and how you use it- but not what I would be doing...

Personally, I very much doubt the crank shaft is worn- the needle bearing and clutch drum possibly- but not the crank. If the arm off the worm gear was broken previously, the notch it sits in could be damaged, worn needle bearing and drum bore will allow excess movement and the same will happen...

In my opinion- yes if the tester used was a small engine tester, 125 should be sufficient. HOWEVER there is a lot more con go wrong with these little plastic saws that cause them to be tossed- other than compression.

Would have been good to pressure and vacuum test before you tore it all down- just to be sure.

Yeah, perhaps less than ideal. Clean it up best ya can and hopefully that one dark line that looks to be a deep groove is not through the chrome. Piston looks like it might have had the old screwdriver through the exhaust port as a piston stop trick. New set of good rings- do the grooves with a...

Id be looking at the bottom rod bearing pretty close- make sure bits of cage are not doing your scoring. Seals are a matter of course- replace those and main crank bearings if at all suspect. I keep the governors working on these- I know the fashion seems to be block them and squeeze a wee bit...

Not 100% but probably common to 480's and the like.

Sweet, hopefully it was run tuned right and oil rich- incidentally, Husqvarna recommend on anything over 80cc- 33:1.

Clean looking saw for the vintage- usually missing a lot more paint from the rear handle especially. Decals still on top cover- doubt its seen a whole lot of hard work.

You have the big washer under the clutch eh? And it is the correct way up? Someone has not replaced the washer under the E clip with the thin one where it should perhaps be the thick one? (there are two types)

As I said- you can pit the cheap one on to get it running then work on the original one. In my experience the cheap top ends are very "variable" in the port timing and never seem to make as good as original power- so you might get it to run, but never as well as it could run or did run. Online...

Not a family of saws I work on- but I know they come lean from the factory- the whole standards and EPA emission rules etc. Without hearing/seeing- vacuum and pressure test would be a good place to start- full fuel delivery system check- filter, fuel lines etc for splits, cracks, clogging...

Seem to remember reading similar somewhere- unless there is any damage or wear to the clip ears- replacement top is probably the best fix.