Dave;

As to your question about compression, it seems about the same when it is hot - probably a bit less but still compression. At no time is it really hard to turn over as compared to a typical two stroke. It almost always will fire up after a couple of cranks with a starter but is tough to start by hand.
I replaced the NV O-rings and I put in a new spring in the regulator with no luck. Basic problem remains the same - little NV adjustment and seems to get hot but dies if you try to richen it more. I even tried turning the regulator around in case I put it on backwards and it made no difference - is there a wrong way for that part??
I tore it down last night and everything looks clean inside - not that I am much of an expert at identifying possible problem areas. The only thing I noticed of some question was the carbon around the exhaust port and a tiny bit around the intake - closest to the exhaust port. I can't tell if it is having any impact on compression or if there is a leak. Is there something I can do to test this?
I am going to take off the regulator and check all those tiny holes for blockages if possible. I guess I'll have to remove the crankshaft to do that properly.

All in all it looks like it should run fine. I did see one head shim that could be removed if you think compression is a problem but I would like your opinion before I try anything in that area.