When mine lost compression (rings were SHOT), I tore it down, and the o rings squish out to compensate for the "void" they have to fill, so depending on how long its been since it was rebuilt, yes in deed they could be bad.
Chances are if its hard to start, that it needs piston rings (I personally would throw the $90 bucks or so into a Vertex/ProX piston assembly and install that w/it.). You probably know this, but when the rings wear, they create "blow by" allowing the compessed air to escape back down into the case, and it will run poorly and start VERY hard.
To do the top end, you will need a piston assembly (should come w/piston, rings, wrist pin, wrist pin bearing, and circlips), gasket set (moose makes really good gaskets that are cheaper than the rest), coolant (you will loose most of it, and its good practice to change when you rebuild an engine), and you should (or at least I do, change the oil in the tranny) the tranny takes 750ml of oil, I run 20w50 synthetic Spectro in mine.
This is all very fresh in my mind because I only rebuilt mine at the beginning of the week.
Also if you run across a set of rear number plates for that bike (stock white preferably, let me know, I really could use a set).