On the off chance you're local to the Denver area (probably a long shot) I'd be happy to buy the whole works from you. PM me if interested.
If not, and you go the part out route - here are some tips from my own experience.
I made my full time living parting out bikes on Ebay for 3 years, and a buddy of mine has the business now and he's doing quite nicely (though he's moved on to quads now as his mainstay - mostly due to what's available in his location).
It will take a while for all the parts to sell, and it takes a substantial amount of effort to dismantle, photograph, list, and ship parts. That said, if you do it right making $1600 on the parts is probably way low. I've never parted a K, but almost any bike was worth about $3k in parts, and that was the low end. Had a couple do more like 4-6k. That's gross, mind you - have to figure in Ebay fees, Paypal fees, shipping costs and materials, returns (inevitable), and income tax (if you're selling a couple grand worth of inventory on Ebay, it will be reported to the feds and you really do need to pay tax on it).
The bikes that tend to do well seem to have a combination of a) enough riders that want to keep 'em on the road, b) at least some parts that break down and are spendy / hard to obtain, and c) something that not everyone and their brother will part out. The K seems to fit these conditions nicely.
I think I did best on an early-2000's GSXR (people break them a LOT and it's an old enough bike that the demographic of owners aren't so much the type of person who will simply buy a new bike when it breaks) and worst on an 80's KZ - not a big fan base there, and it's hard to find one that HASN'T been parted out. If it was a Honda from the same era that might be different story - I recall selling a set of faded but uncracked side covers for an '83 NightHawk 650 for $50 MORE than brand new OEM parts, simply because it's something that people break a lot and they are no longer available from Honda. On that note - everything should be listed as a Buy It Now, not auction style UNLESS it's an unobtainium part like those side covers. When you want a part for your bike you want to buy it today and have it in hand right away, not wait for an auction to end that you may or may not win. At least, that's my theory on why auction style parts listings seem to do poorly. If you have a really rare and desirable part, by all means go auction style and see what the market will bear.
Parts will take a while to sell. Some things will sell the day you list them (gee, maybe I priced that a little low...) and some things that you think would be gone immediately take a year or more to move. If you have a low enough cost to keep them listed, it doesn't take much effort to ship a couple times a week so my tactic was to just wait it out - almost anything sells, sooner or later.
Don't overlook the unsexy stuff like bolts and fasteners. They are often dealer-only parts, and someone will be glad to have them. $10 for a box of assorted bolts is $10 - I always looked at it as "if I had a $10 bill in my hand right now, would I throw it away?" To that point, don't damage parts when removing them - take your time and do it right. This should go without saying, but on my first part out I snipped wires like a bonehead instead of unplugging them, and you better believe that made them sell for a hell of a lot less than if I'd taken the extra 30 seconds to do it right. Same goes for stuff like flywheels - if it needs to be removed with a puller, use a daggone puller and not a prybar with a BFH.
Price within the range of what similar parts for the same bike are going for on Ebay, unless what you have is in much better or worse condition than average. If there is an outlier on the low end - for example, some guy is selling a final drive for $20 while everyone else is asking $150 - don't sweat it, price at $145. When that guy sells his FD for $20 (which will probably happen in a day), yours will be the cheapest on Ebay. Also, some parts - like engines - people would rather spend more on than less. It gives the impression that they are buying a quality part, even though the $50 engine might be just fine. Obviously, only sell a quality part at a quality price if it IS a quality part, and lean toward describing your part's condition as being slightly worse than you think it is - you'll have happier customers and better feedback than if you do the reverse.
Shipping: Ship fast and charge accordingly. Nobody likes to wait on parts while their bike is out of commission, and they tend to forget that they cheaped out on shipping when it's been a week and their USPS Parcel Post box still hasn't arrived. Don't offer slow crappy shipping, it won't make people happy and that will cost you money in the long run. USPS and FedEx seem like the best bang for the buck. Flat rate boxes are amazing for MC parts, and you can get the USPS to send you free Priority boxes (not just the flat rate) for free, which saves some on cost.
So if you like taking stuff apart, are somewhat online savvy, and don't mind shipping on a semi-daily basis it can be a really fun way to make a decent little sum for something that's not really worth much in complete form. It is some work a lot of work though, and because you need to ship fairly promptly to keep your customers happy it's not something that you can do a couple weekends here and there when you feel like it.
I happen to like all of the above so it's something I continue to do from time to time, though I don't have anything going at the moment. If you're not so excited about the effort involved, you can always sell it complete to someone like me for a few bucks and have it off your plate.
