Maybe its time for a new sleeve and piston. How is the compression?

The blue wire only provides positive to the glow plug, you will need to connect it to the engine's body (ground) to provide the negative current for it to light up. Your glow plug igniter has a positive center and negative shaft. (or vise versa)

Its also a good idea to put the blue wires inside a silicone tubing (fuel tubing) to protect it from heat and prevent a short.