First Reassembly

Its time now to put the bike back together to some extent so we can see what additional mods need to happen other than the cradle. I replaced the chain guides and dust seals and re-greased the swingarm bearings.
Note that the swingarm bearing races are different lengths. the short one goes on the chain side.

Line up the frame, swingarm and rear engine mount, and slide in the swingarm bolt. Sight down the swingarm to be sure that the chain guide lines up with the pinion sprocket to make sure you got all the swingarm bearings, spacers and washers in the correct places.
It's good to clean and re-grease all the linkage bearings while you have them apart as well. When you pull the center bearing race out the pin bearings may fall out so be careful. Get them all out and cleaned up, then hold them in place with bearing gease. Install the dust seals with bearing or assembly grease on the inside of them, but wipe off excess on the outside once the bearing and seal are all back together to prevent attrackting dirt later.
I put the shock on to allow me to test the alignment of the air filter boot to the carb and be sure it doesn't hit the spring.
I rebuild the front forks with new seals and bearings. It is smart to do replace the seals and oil before they start leaking, to keep the oil free of solids. The forks will degrade very quickly if some of the outer tube aluminum starts to wear off and form a slurry with the oil. It is much better to replace seals early than a bit too late.

I always use genuine Honda parts for bearings and seals. I worked for a company that designed and manufactured seals and learned that just because a bearing or seal fits in the spot does not mean it has the right characteristics. Believe me when I say that an aftermarket supplier is not going to do a better job of selecting bearing and seal materials and design properties than the OEM.
If your forks have some substantial wear, and it looks like the oil is dirty or metalic looking, you will want to remove the cartridges from the fork lowers to allow you to wash all the old oils and debris out do the lowers and cartridges with solvent. If you try doing it while they are assembled, you won't be ably to get all the solvent back out of the cartridge, and it will cause your new fork oil to have a different viscosity. This takes a special tool, which I didn't want to buy, so I got out my angle grinder with a cutting wheel and modified the end of my floor jack handle. It worket fairly well. Another alternative is to remove the cartridge retainer using a impact driver. YouTube has some great step-by-step videos showing fork rebuilds by Rocky Mountain ATV. (They also have top-end rebuild and bottom-end rebuild videos.)
When you are ready to reassemble the forks use pleanty of assembly grease and leave the springs and oil out of the forks. We will need to be able to tie the front wheel up as if the forks were fully compressed to make the necessary mods to the pipe.
This is only necessary on a 125 frame. Without moding the pipe, the front wheel will bind on the pipe and may cause an unsoliscited breaking when landing a tall jump. You can imagine how unplesant that could be. Some people will buy a CR125 and use all the parts except for the frame, then buy a CR250 frame off ebay. All the 125 parts fit on the 250 frame, and this allows you to avoid the pipe mod. I've got a TIG welder so I don't mind the mods, and I like a few other features of the 125 that will be apparent later in the project.