It's probably easiest to work it out backwards, and I'm very rusty with imperial units so will convert to metric. The kinetic energy of a rotating disk is:
E = (1/4) m r
2 * w
2 when w is measured in radians per second.
Using metric units, E will be in joules, m will be the mass of the flywheel in kg, r will be the radius of the flywheel in meters, and w will be the angular velocity in radians/second.
To convert rpm to radians per second, you'd take
(revolutions / minute) x (2 pi radians / revolution) x (1 minute) / (60 seconds)
i.e w (rad/sec) = (rpm)*(2*pi) / (60)
So, starting with the system at its' lowest point, all the energy is in the form of kinetic energy from the spinning disk.
m = 53oz = 1.5Kg
w = 1025rpm = 1025*2*pi/60 rad/sec = 107.3 rad/sec
r = 2.5 inches = 0.0635 meters
E = 0.25*1.5*0.0635*0.0635*107.3*107.3 = 17.41 joules
After 85 revolutions the disk will have been lifted 6.5 inches, or 0.165m, and the wooden bar at the bottom will have been raised twice this: 0.33m.
By this point we want all the rotational energy to have been used up (so that it will reverse direction and star unwinding again). The energy to raise a mass is the force required * distance covered, and the force is 1.5 * 9.8 (mass*gravitational acceleration), so
E
disk = 1.5Kg * 9.8m/s
2 * 0.165m = 2.43J
If a steady weight of 2.5Lbs (=1.13Kg) had been applied (including the weight of the lower beam) throughout the winding phase, the energy required to raise this would have been:
E
beam = 1.13Kg * 9.8m/s^2 * 0.33m = 3.65J
The total energy used to wind the system up is therefore 6.08J, and on release it generates 17.41J

we have a super perpetual motion generator, giving out more than twice the input energy

.
To get a more plausible answer you would need to accurately measure the weight on the bottom beam. Your disk also has a solid axle which should be treated as tall narrow disks above and below the main disk. I assume that the 1.5kg includes these, and from the look of it that would account for almost half the mass. This would have a much lower moment of inertia as the weight is more central and could well account for the discrepancy.
If you were to build this as a generator you would presumably be applying extra force in the expansion phase to build up the speed, and then use a dynamo to convert the kinetic energy to electricity as it winds up again. It would be interesting to see how the maximum rotational speed changes with an increase in applied force.
To get an estimate of the energy loss in the system, apply a fixed force and measure how much the maximum speed drops on each cycle. If possible do this with a wide range of weights on the beam. If you decide not to proceed with this, then I look forward to your next challenge!