I ran a compression test last nite in my JDM gsr swap.

We got 175 -185 in cylinders #1,2,4 and in #3 we got 120

And when we looked inside the spark plug hole, it was caked with dirt and crap all the way up to the top of the head where the valve cover sits. We knew something was wrong just by looking into this cylinder. All the other spark plug holes were a lot cleaner and not even close to being that dirty. We thought it could be a blown head gasket ? Or probably a shot ring.....

Any ideas on what this could be from these symptoms ?

Also, will a mugen thin head gasket help produce anymore power in a jdm b18c gsr motor?

 

It's probably either bad valve seals or bad piston rings. Drop some oil into the cylinder and retest it. If compression goes up, your rings are gone, if it stays the same, then it's the valve seals. If it was your headgasket, and coolant was getting into the cylinder, then it wouldn't look like there was caked on dirt in there. The coolant would actually steam clean the cylinder to an extent, and it would actually appear clean.

A thinner headgasket will raise your compression ratio and help produce a little more power.