One is a holed diaphragm, fuel flows down the vacuum line into the #2 carburetor, and into the intake port. The petcock will still function normally as far as shutting off the flow of fuel when the engine is off, and unless the hole is very big, it will still turn on the flow of fuel when the engine is running. To test for this, check for fuel in the vacuum line. You should be able to suck on the vacuum hose and not get any fuel.
The second path is by the rubber o ring not sealing properly, so the fuel cannot be shut off. It just leaks all the time. When it is on the bike, full tank, and with fuel in the line to the carburetor there is a vertical drop of over a foot, this creates quite a syphon. If the petcock can't seal perfectly fuel will flow slowly the whole time until the tank is emptied into the crankcase. If you take the hose off to look you lose the vacuum of the syphon, it is possible that it won't leak while you are watching it. A good test is to run a fuel line from the petcock down a few feet to a container with some fuel in it, go to prime to fill the hose, move it back to ON, mark the fuel level in the container, and go away for a while. If you come back and there is more fuel in the container than there was, you have a slowly leaking petcock. It only takes a few drops a minute to put a gallon or so onto your oil over time, very hard to detect a slow leak just by looking at it.
If you want a decent reliable motorcycle, just skip all the testing and buy a new petcock. The old one did it's job for thirty years, get a new one and forget about it for another thirty.
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