Gear issue with Lifan 150cc horizontal
 

I bought a monkey bike for me to restore and along with it a lifan 150 engine almost brand new. Everything on the engine was fine and i drove it for sometime before starting the restoration on the bike. The problem is third gear, 1, n, 2, 4 is all fine and as normal but third gear feels almost like it's jumping between the gear and neutral constantly (accel and deccel)

I thought that maybe the physical gear was broken or mounted wrong so i tore down the engine and reassembled the gearbox and everything looked like what a lightly driven motor should look like. Does anyone have a suggestion to where to look? Quite a big problem for me because 3 gear is the optimal cruising gear on all the streets around me.

(*To clarify the engine was driven 200km and had a break-in oil change before i bought it)