Not even close to being an expert on anything but do have some years working on gas and diesel engines. The crank being hard to turn when only the #1 valve train operates is interesting, perhaps an out of tolerance camshaft, bent valve stem, seized valve guide, galled cam lobe or rocker arm? For starters a compression test on all cylinders should be done.
When things settle down when operating the de- compression lever on #1 leads me to think of the above valve issue(s) or perhaps a blown head gasket in the #1 area. Let us know what you find.
A compression test has been suggested a couple of times. Don't know if one was done, but it sounds like the head has already been taken off. If #1 piston doesn't come all the way up it is likely to be a bent rod.