Hi Roland,
Don't make any rash decisions until you take out the head, sleeve, piston, etc. and see how bad things really are. I too had a similar experience when I bought Tessa in February. While she turned when started, she couldn't really build up enough compression to ignite the diesel in her cylinder. I thought that the piston rings were stuck in their grooves until the mechanic I hired pulled the sleeve, head, piston and we then discovered that rust build-up on the cylinder head, valves, spring had affected the seating of the valves to decrease compression. As well, rust had formed on the walls of the cylinder wall itself causing pitting which also affects compression. To make a long and sordid story short, the mechanic(s) pretty much told me to re-engine to the tune of CDN$ 10,000 or do a partial re-build at CDN$3,500.00 as Farymann parts can be very expensive. Dejected, I asked my brother in law who's a millwright and he just chuckled (the nerve!) and made a couple of phone calls before he had to fly to Texas for a job for two weeks. He had one of his suppliers in Hamilton, ON lightly hone the cylinder and clean up the cylinder head and valves of the rust and re-seat the valves and he told me to get new piston rings as they were probably 30 years old and they had to come from Germany. Are you ready for this? The honing and reconditioning of the cylinder head and valves as well as re-seating them came to a whopping CDN$ 40.00 (forty) and the piston ring from Germany came in at CDN $ 190.00 (that's one hundred and ninety) which at CDN$ 230.00 pales to whatever the experts wanted to take from me. On July 1 my brother in law took all the elements and put it all back together himself and with a cheshire cat grin, he turned the key. She fired on the first try and she's been rockin' and rollin' ever since without fail. If you can find a reliable supplier to first of all clean off the rust and do what I just chronicled here and have them do precise measurements of the cylinder wall just to see if you're well within tolerances which I'm gonna bet that you are then go the same route before doing anything else. Talk to Dave at EntecWest who mirrored what my brother in law said and did which save me the cost of re-powering which shouldn't really happen very often especially on fresh water boats. Once you get her going, make sure you put a diesel fuel additive every time you fill the tank which replaces the sulfur that they take out on today's diesel. We need that sulfur for lubrication in our older engines. These engines should outlast our boats.
Good luck and let me know how you fare.
Jose