Hey,
I got an old SR series OS engine which was rusted and locked. Finally after soaking it in WD-40 for 4 days, i got it moving. However, the rotation is not smooth. I can still see brown (rust or what?) on the crankshaft. There's ALOT of it. The piston and sleeve is clean. Perhaps the bearing is bad? What else could be the reason that the rotation is not smooth as glass. Should i keep trying or throw away this 15 year old engine in the garbage. The compression seems good enough.
Thanks

Most likely the bearings are shot. A full disassembly should be performed, the bearings replaced, and the crankshaft cleaned up. The steel parts in the engine are the ones that will rust. Even if you use lots of WD-40 to free up the engine, the bearings will still have rust on them and be rough from the pitting.

Check the piston ring, too. It may also be rather rusty. If it's rusted, it will likely stick in the ring groove when you attempt to run the engine, and may not allow for a good compression seal.

Also, if you run a rusty engine, loose rust will be distributed throughout and rust is a dandy abrasive compound.