A leak down test is the most definative means of checking engine condition. You place the piston near TDC, and introduce compressed air through a special set of differential gauges. One measures how much pressure goes in, and one measures how much leaks out. All motors leak some, but how much determines the condition. Also you can listen around and figure out where its leaking ( exhaust, intake, rings, etc.) If you have never done this before I would recommend having it done by a pro, as there are some hazards involved ( the engine needs to be stopped from turning, the air pressure can move the entire vehicle and wreak havoc!) Also the tester cost a bit of change ( autozone loaner maybe?)
