most likely anodized or powder coated/painted aluminum.

the flywheel doesn't "have" to be machined, it doesn't save that much weight and without a shroud around it it isn't going to use too much power, don't go too nuts on removing aluminum, all together there's probably 3 ounces of extra aluminum involved in the front part behind the flywheel, I would leave a fair amount so the coil mount lasts a good long time.

check the "engine conversions" forum for more on converting the engines