Does installing a spark arrestor make a bike have less power? Kx65...
Or is jetting needed to compensate?

Yes. But it is not enough to affect your lap times unless you are an INT/EXP.  Don't change jetting.

Yes that is what I thought as well but on my sons kx65 when I put on his stock silencer the bike has alot more power than with the FMF spark arrestor...I took apart the whole FMF silencer and cleaned the "turbine core" part and replaced the packing figuring that would solve the problem but it didn't...cleaning it did solve the top end bog it had though.
Only thing i can think would be that the spark arrestor has more of a power limiting effect because the 65 is such a small motor but on say a 250cc the power loss is less noticeable...

Any input or suggestions is appreciated!