Need help K341s that has been sitting for few years

[Charrie 22]

I bought a 1985 416-8 a few months back and now I an ready checkout the engine. The PO said that a few years ago he parked it for the winter and when spring came around, it wouldn't start. Said that he changed point, plug, coil, and did a little more work then gave up. Said that his Father in law bought it new in 1985 and was his baby. i think it is generally in decent shape but I question what a few years really is due so some of the rust on certain unpainted parts. Anyway that's basically what I know of its history.  The PO did say that it was running great when he parked it.

 

The day I bought it, I could turn the engine over by hand and felt some compression. Today I pulled the spark plug and put about a tablespoon of transmission fluid in the cylinder and then turned the engine over by hand a few times. No sticking places but almost felt like I could feel the pressure from the valve springs as I slowly rotated the flywheel. After about an hour I connected a battery and used the starter to turn the engine to check compression. My old gauge was reading around 40psi. I removed the gauge and added another tablespoon or two of transmission fluid hoping to get some around the valves. I re-checked the compression and this time it was around 35 psi. I have 2 gauges and one is defiantly bad so I am going to do the test again tomorrow with new o-rings on the hose. 

 

So, that is where I am at right now. I do have a few miscellaneous parts and gaskets. I also have 2 new head gaskets. Am thinking right now that low compression could be stuck ring or rings, issue with one or both valves. I can get a loaner leak down compression tester if need be. 

 

Where should I go from here? Should I pull the cylinder head off to inspect the cylinder and valves or focus on getting it to run a little and re-check the compression before tearing into the engine?

Haven't changed the engine oil yet. Should I go ahead and change it now or wait and see if I need to go into the engine? I actually have 5qt jug of oil with missing label. Either 5w 30 or 10w 40 that i can  throw in there for now and use it while trying to get it running and then flush it out. 

 

All advice on what to do is welcome!

 

Thanks Charrie