Haha!! I wouldn't eat those... 

Hey all,  I finally had time to open the valve cover and found these floating around...I'm assuming this is what is causing the compression issue.

 

 

Yikes! Lash pads!

hopefully you can just put it back together and all is good

I agree, I if you have taken apart carbs and small engines you can handle the work. Do you have enough metric tools? Do you have a torque wrench ft/lbs and in/lbs? Get a HAYNES MANUAL specifically for the engine. I see it has a turbo valve cover! This site is a great resource. Have plenty of space and plastic containers to organize everything. Motorsport Auto and others sell the tools needed to complete the valve work. A Haynes Manual shows you step by step leaving no dots to connect. You can build them like the professionals if you can afford the internals. I had a 2.8 with SU power built 17 years ago for about 3.5K to answer your question but it was nothing wild. A mildly wild one can cost about 11K and a really wild one can be north of 35K. Depends on how much you want to spend. Good luck!

Edited August 1, 20177 yr by esmit208
Clarification

1 hour ago, Kirob24 said:

Hey all,  I finally had time to open the valve cover and found these floating around...I'm assuming this is what is causing the compression issue.

 

 

Is that what is commonly referred to as a proper SWIPE PATTERN? I have been trying to find this out forever. A very good picture of it BTW

On 5/15/2017 at 6:55 PM, Mark Maras said:

 If you can, take pics when you remove the cover. We all want to see what gremlin lurks under it.

Here is what I saw

 

Others have more experience but it's looking like at least one, maybe, two valve-piston collisions occurred, bending the valve.  That would explain the noise and the pressure readings, and the misplaced retainers and lash pads.  That's what those parts are, they hold the valve spring to the top of the valve.  Without those parts the valve can slip down and the the piston will hit it.

You can probably get by with just removing the head and having it repaired.  Look closely at the round piece on the top of every valve and you'll find the two that are different.  I can't really see it in your pictures, they're dark.