Ok so today after driving around for a bit, I got out on the freeway and opened up on the straightaway. I got to top 3rd (around 10ish-11k RPM) and backed off the throttle because a slow car pulled into my lane up ahead. The bike started backfiring pretty obviously as i was slowing down (still in 3rd) and started dying off. I pulled off the road and it was completely dead. 
The bike keeps cranking but just won't fire up. Also, there is some oil on the right side of the engine (possibly coming from valve cover?) which I don't recall seing before, but I may be wrong. Tried the switching the fuel position, still won't crank. Have about 3/4 tank of gas, fresh plugs....anyone have an idea what the problem could be or what I should try to look for? 
By the way, the bike in question is a 1990  500E if that helps in any way.

Did you switch the petcock to "prime" to allow fuel to fill the bowls?  Just in case it was some sort of fuel delivery problem...

tried switching it to prime as soon as it wouldn't fire the first 3-4 times, still the same

You said fresh plugs?  When i was working with my jets I had a few backfire's through the carb and then the bike wouldn't start.  When I pulled the plugs one of them had the insulation broken.  So even if the plugs are new, I'd definatly pull them and make sure that they aren't broken.  My 2 cents.

wow I hope that's all there is to it. I'll check them first thing in the morning, thanks

Please let us know what you find.

Change the Plugs.If they are Champions switch to NGK,Denso or Autolite.Usually 2 Plugs won't go Bad at the same time.Even if one goes bad one cylinder will fire.Sounds like the CDI to me.I have a Good Spare one I'll sell if yours turns out to be Bad.

spark plugs didn't help apparantly 
I'm not a bike genious, usually work on cars, so what is the CDI? How can I see if that's broken? and how much do you want for it if mine is gone?

just tried push-starting it while i was trying to get it back to my house and noticed a few things:
- clutch seems weird, almost like it wont pull in all the way
- chain is abnormally lose to the extent where it is rubbing off the frame

I'll take the cover off tomorrow and check it out further, but has anyone ever had a similar experience???

The CDI is the Capacitive Discharge Ignition Box.It's what Makes it go Vroom. If it goes Bad your Motor comes Unstarted.   Sorry Couldn't Help it I've had a few Beers this Evening.Oooo Look its almost time for........ a Beer. Gotta Go I have a Case to Solve.