what are the symptoms of failing vacuum fuel shutoff ?

I'm seeing a noticeable decrease in fuel economy over the last couple tanks. Have a short list of things that could be the cause that I will track down one by one, but I wanted to know if the vacuum fuel shutoff could also be to blame. I think I remember reading that when it fails it can dump raw fuel into #3 cylinder, or am I mistaken?

As I recall, the vacuum fuel shut-off just shuts off the fuel line when the engine is off, to prevent inadvertent flooding of the carbs. If it fails, it generally loses it's vacuum and starts restricting the flow while the engine is running. Doubtful this is the cause of the decreased gas mileage. It is easy enough to bypass, if you want to take it out of the equation to isolate, the cause, however.

The vacuum shut-off valve is connected by vacuum line to the right rear cylinder inlet. Inside the valve is a rubber diaphragm and spring, basically the inlet vacuum draws on one side of the diaphragm and compresses the spring, on the other side is the fuel valve which is lifted off its seat to allow fuel to flow. One failure mode is for the diaphragm to split, so fuel can then pass directly into the inlet port down the vacuum hose.

It's a simple matter to remove the vacuum valve altogether, and connect the filter outlet directly to the fuel pipe to the carbs. Actually fits like it was intended to be done that way. You need to plug the vacuum line to stop it leaking e.g.a golf tee, bolt or similar.

here's what I found. The #3 plug was horribly fouled, which explains the rough running I had in the last 50 miles or so (but it really wasn't all that bad). All the other plugs were OK, so I'm ruling out a weak coil as that would have affected 2 cylinders, not just one. I was also smelling raw fuel after shutting the bike off recently, which I know was the vacuum shutoff. After cleaning off the plug fouling the engine runs normally again, so I'm less suspect of single cylinder issues like bad plug, plug wire, or loss of compression. I don't think any of those things would have gone away just by cleaning the plug. So the vacuum shutoff valve is in the trash, I did a 10 mile test ride and filled the tank, now to put a few more miles on and see if the mileage returns to normal again.

You are right about a bad coil, that has to affect both plugs on a bank. You can do a simple plug end to plug end resistance check as well (should be 22.5 - 27.5 kohms), which would highlight any issue in the plug wires/caps. There are resistors in the plug caps that can apparently get some corrosion, you just stick a screwdriver into the plug socket and these can easily removed and re-instated.

put enough miles on it today to determine the fuel economy is back to normal, so the problem appears to be fixed.

And, in the process of removing the shutoff valve I found a mouse nest under the airbox. Never had that happen before with any bike I've owned because I usually ride often enough to keep them away.