When you said it still has compression, how did you check that? One of these motors can feel like it has compression but not have enough to start or run well.
The easy way to check is to try to turn the engine over by turning the flywheel with one finger only. If you can easily turn it over with one finger then you do not have enough compression. These engines rely on a tapered piston sleeve for compression, not rings. When an engine is new it can be VERY dificult to turn one completely over by hand, even with the motor out and grabbing the flywheel with your whole hand.
When you lose compression on these motors they have a real hard time drawing in fuel and of course with less preasure it's hard for them to fire as they rely on the preasure to ignite the fuel.
If I had to guess, I'd bet that low compression is going to be your problem.
You might try to repinch the cylinder sleeve or just replace both piston and sleeve (usually $35 - $60 for parts)
Good Luck
Dave