From what you have said it would be hard to tell the engine is in bad shape. Usually, an engine with low compression will be very hard starting and it will blow blue smoke for quite awhile when cold, or under a load. There will also be blow by which will drip into the bilge on older engines that are not vented to the air cleaner for reburning. I test a diesel by cold starting it, without glow plugs or just minimal depending on air temp, and by how much smoke there is on initial startup (blue/oil, white/unburned diesel) and for how long (some engines typically smoke but will then clear within a few minutes). If it starts well cold with no excessive smoke then I check oil pressure against the manufacturers specs. when warmed up to normal operating temp. I'll then run it under load at full throttle for 5 minutes, there should not be excessive smoke and it should not over heat (temp will increase but not significantly). After running it hard I check oil pressure at idle and compare to manuf. specs. Then I shut it off and it should shut down quickly, only one revolution or so, not slowly wind down after shutting off the fuel. If it passes these tests then it's time for an oil analysis and check the antifreeze to see if it is clean on FWC engines. External examination can tell you a lot before you even start it, look for leaks (oil or water) especially around the front of the crank and at the back of the oil pan (main seals). Look for corrosion and rust and if found determine what's causing it. Any discoloration of the oil or antifreeze needs to be checked out. Generally, if you are not extremely familiar with engines you should have an engine survey done, and it's not a bad idea even if you are an "expert".
SV Laurie Anne
1988 Brewer 40 Pilothouse