Thanks Jason. I knew you would reply to this topic. I did heat cycle the motor and we ran two practices and two race motos on it and the compression was still low. I did not mic the cylinder but it looks all right with the ring in it.
I actually got tired of screwing with it and bought a 2004 CM50. Wow, what a rocket. I'm gonna try putting the Polini together one more time, checking everything out before final assembly. If it's right, I'll sell the whole bike. If not, I'll probably part it out. I need to get some money so I can get a PW3 for the Oil Injected Class.