If the cams aren't spinning it would explain his comp test. Broken timing belt might be the problem, and as far as I can tell I don't think he should have impacted his valves if they're in normal positions for a B-series. OP: You need to take the timing cover off and examine the timing belt, it'll probably give you a good idea of what's going on. If there's no timing belt on the cam gears then try spinning them slowly and see if you change your compression test results. If you can get every cylinder to come out right, then all you need to do is re-time the cams and put a timing belt on it. If you can't get them all to come out even then you've got a bent or impacted valve that isn't seating properly. That means it's time to take the head off and see if the motor is salvageable at all. It probably isn't, if that's the case.

Here's to hoping you only have a broken timing belt.