1998 yamaha 125 kickstart will not retract back when i tighten down side cover

hi there it sounds like the return spring is broken inside the cases this useally a sidecover off to replace it hopes this helps

Rock the bike gently forward and back while shifting into fifth gear. Now push the bike forward while sitting on it and see if the rear tire turning will turn the motor. If not, your motor is stuck. If it turns, you have a kickstarter issue.
Many people never learned to depress the kickstarter down until you feel it engage before kicking it through. Kicking from the top slams the gear teeth together and causes damage. You may need to pull of the engine cover to determine if there’s damage.

sounds like the gears inside are stripped or missing teeth open up the side case and check and replace any gears missing teeth or stripped

Sounds like the piston seized.
Pull the spark plug and hand crank the engine if the piston moves up and down with little effort your ok but if you have a lot of resistance top end rebuild needed.

Common cause of kickstarter not engaging(I am guesing that this is your problem) is a broken spring on the kickstart mechanism,or that the kickstart idler gear cerclip has fallen off(this allows the idler gear to move forward on the shaft & thus won't allow the kickstart gear to transfer drive to the clutch hub).Remove clutch cover, put kickstart lever back on shaft spline,activate kickstart lever by hand(easier with sparkplug removed+in neautral)as kickstart lever moves down 90 degrees the gear on the kickstarter mechanism should move out to engage with gear next to it(kickstart idler gear).If the gear on the kickstarter mechanism dosn't move outward it has a broken spring on the kickstart mechanism.replace spring and all should work.(if the spring is broken you need to try find the broken piece with a magnetic pick-up tool as the broken part can cause further damage if not removed)To do this job I highly recommend you first purchase a workshop manual which will guide you through these processes.After all a manual is the most valuable tool in your tool kit.