Larry, I didn't relise you were in KC, I am out in Lee's Summit, we are neighbors!
#1 is low, the rest are just fine. Check the valve springs on #1 cylinder and make sure they are not broke. Next, grab the valve and spring and see if you can wiggle it around, you should not be able to. You can also try tapping the valve stem with a hammer (after you remove the rocker arm) and see if the valve is seating all the way. It could have carbon holding the valve slightly open. When you tap the valve, you should hear the valve shut pretty solid.
When you had the engine running, did you hear a miss or pop out the tail pipe or in the carburetor? Exhaust valves not sealing will make a constant miss sound in the tail pipe, intake valves let you know through the carb.
Leaking or broken rings will generally smoke while driving, most of the time you cannot see it, but you notice the oil level in the pan has dropped. Try adding a spoon full of oil or more to the cylinder and retest the compression. If it rises, then the rings are probably worn. A easy test with out spending money is retest that cylinder and not release the compression on the gauge, then put your ear up to the carb and listen for air hissing, then move to the tail pipe. If you hear anything, thats where the problem lies, if all is quite at the pipe and carb, listen real close down at the head, air escaping from the cylinder will hiss deep down in the block and you should be able to hear it. You may have to crank the engine some more to build compression again. A leak down gauge does the same thing only it has dials to show how fast its leaking. In your case it doesn't really matter how fast, you are only after wheres its going.
Joe
