My TX500A has always had a 120/90x18 since I first replaced the original . I replaced my rims with Akront 2,15x19 front and 2.50x18 rear , and there is absolutely no room to go to any larger tire between the rear brake stay arm on the right and chain on the left . Later model XS500's may have more room , but I have no experience with those bikes .
Long story short , 120/90 works well , and provides plenty of traction . I road raced my TX with that and a 3.50 front tire , and today's tires are better than what was available in 1976 !