Quoted:
I thought the yugo, or the sks for that matter, was complaint based on having U.S. parts put in by the importer.
Since there are NO US made parts put in SKSs by the importer, your supposition is wrong.
The Yugo 59/66 and other SKSs with a bayonet are imported as curios or relics, which is how they qualify for importation.
Modifying an SKS that was imported as a curio or relic takes it out of that status. If the modified rifle could be imported 18 USC 922(r) does not apply since it only prohibits assembly of a rifle that cannot be imported. If the modified rifle could not be imported, you must comply with 18 USC 922(r).
There is no "damaged parts" exception. The regulation exempts replacing parts on a rifle imported before the effective date of the regulation - 11/30/90.
Unfortunately, AFAIK, no one has applied to import SKS rifles other than as C&R, so there's no way to be sure if the gov't would have approved the application to import.
The best guide would be to configure the rifle like the post '89 Chinese rifles - standard ten shot non-detachable magazine, no bayonet and no muzzle device. In that configuration, the rifle met the redefined "sporting use" requirement and was approved for importation.