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You have a vacuum operated petcock. On and reserve are the vacuum functions and shut off automatically when the engine stops. "pri" means prime and will allow fuel to flow until the tank is dry (engine on or off). Run the bike in the "on "position for normal use, "reserve" is an emergency...

When you pull the lever, you are indeed giving the engine choke. However there is such a thing as too much choke. This is why your engine runs choppy. As long as the engine runs well, leave the choke off. My brother has had 2 shadows (an '86 700 and a '96 1100) and I don't think I ever saw...

Test the fuel pump relay first.

Are you sure it's a 250? Never heard of that one. 500 & 750, yes. Realistically, a 250 2-stroke will be like riding a 400 4-stroke. If this is a first bike, it's probably not a bad choice. Good luck.