Dude, my first motorcycle was a brand new '78 SR500. Loved it to death. Crashed it more times than it deserved. But it is a great first bike, with tons of potential for upgrading and modifying. I'd still recommend riding it stock to begin with, then once you're used to it, make the changes you want.
One good source for parts is
http://www.thumperstuff.com , this guy is dedicated to the breed.
I race the XT500 in vintage flattrack, I can tell you the engine mods are well worth it, and relatively simple if you're mechanically inclined. The stock engine is good for around 30 HP/27 lb/ft torque, and doing the 540cc mod with a decent cam will bump you to 34-6 hp and similar torque. Add a good carb and pipe for another 1 or 2 hp.
Put the thing on a serious diet, you can easily shed 20 lbs, more if you spend some money.
Get one soon, they're getting pretty popular in vintage racing.
FR