Your engine is a version of this model
http://www.osengines.com/manuals/50s...1fx-manual.pdf
the 46 size obviously.
Your engine may have been damaged by the previous owners but I agree that you should have an experience person look at the engine before tearing it down. It actually sounds like it has some extremely lean runs on it and may have burned a hole in the piston top. Try looking into the exhaust port or glow plug hole to see if there is visable damage. whichever hole you look into, shine a light into the other for illumination.