Like pig said, it's hard to tell from the photos but it doesn't look like the engine was run all that much but it does look like castor gunk. Have you tried just heating up the engine with a covering heat gun and rolling it over? The heat will sort of melt the castor gunk and free it up. If that works then you can just heat it up again and flush it with alcohol, use a little oil on the moving parts and fire it up. Just make sure there is no floating junk inside the engine. At $400.00 bucks for a 1.20 these days it's worth every Penny to rebuild them. I have a good little book on rebuilding the OS four strokes if you want the name, I think it is still published.
Gene