When I wrecked my 2004 CBR 1000RR back in 2005 and the insurance company totaled it, they sent it to a salvage yard about 70 or 80 miles from where I live. I bought my new bike and called the salvage company to see about buying it from them and getting a price for it. We agreed to the price and he asked me if I would like to get a salvage title for it or a "junk" title. I asked him what the difference was and he said that the junk title was cheaper. Since the bike was never going to be ridden on the street again and I was going to make it a dedicated track bike, I chose the Illinois Junk Title. After reading through these posts and info in here, it sounds like the junk title was perfectly legal in the state of IL. When I moved to TN in 2006, I tried to get a TN title for it and was told that I could not get a TN title based on the IL junk title, so I just hung onto the junk title till I sold it to a guy in Florida. I signed the back of the title and turned it over to him and told him that I couldn't get a TN title, but the IL title was what was issued to me from the state of IL back when I bought it. He was going to use it as a track bike also, so I guess it didn't matter to him either.
FWIW in Indiana one can have an officer come sign an inspection form certifying a bike as not stolen. That form, along with the bills of sale, were used to register both of my dirt bikes with the Indiana DNR. I believe a similar process can be used to get a title issued in Indiana.
If I recall correctly, a "junk" title is given to prevent the vehicle from ever being registered on the street again. Basically, this gives the holder ownership of a pile of useable parts including a frame (the part that requires the title) but not a complete vehicle in the eyes of the state. A "salvage" title is given to a crashed vehicle that can be made road worthy again but will never be able to be sold as an undamaged vehicle. Once upon a time, there was a loophole that allowed for crashed vehicles to be retitled without the salvage designation. Some states do not recognize "junk" titles because they only title vehicles that can be made road worthy. K3 can better explain Il law.
my audi had a rebuild title when i bought it. i was told it had a salvage title at one point and was rebuild by a shop and inspected by il state, and issued a rebuild title.