How do I know if it has compression? I ran a out 2 and half gallons of gas through the motor.
2.5 gallons is a fair bit of runtime. but if its taken good care of it should still have life left.
compression is felt buy how hard it is to pull over the motor. when the piston hits top dead center it should snug against the wall of the cylinder. that feeling is called "pinch". on a fresh motor, the pinch can be strong enough that its hard to pull over the motor.
you can also get a feel for the pinch by pulling the glow plug out and turning the motor over by hand (via the flywheel) you should be able to feel the pistion "stick" slightly at the top. You should also be able to hear it suck air.
As well, you can pull off the cooling head and put a finger into the cylinder. at the top, you should feel a slight ridge. if you dont...if the top of the inside feels very smooth then the pinch may be gone and it wont run well (if at all)
but since you have fuel being sucked into the motor, its more likely you have an air leak, then a junk motor.