I need some help.., Serious engine failure Options

[Mockmaw]

It's a very sad day for me and my Porsche.. something is very, very wrong.

The engine is running poorly, it's smoking, and it's making a strange flapping noise.. I talked about this a few weeks ago. We've since determined that there's a 'leak' between the cylinder and the cylinder head that's spitting oil and compressed air. The fact that there's compression leads me to believe that the connecting rod is still good.

I'm stumped and I'm frustrated, so I need some help: What could be the problem? What can I do to help pinpoint what's happening?

The fact that there's compression leads me to believe that the connecting rod is okay. Is the cylinder head warped? The cylinder?

Grr.. I just put money into engine work and a week later this happens.. the pessimist side of me wants to say that the two are connected, but it's probably just the standard mechanical failure that happens to 30 year old cars.

So what do I do next? What are my options? The car's in SD and I'm in the Bay Area working fulltime and doing summer school.. which means I'll have plenty of time to research things but little time to actually work on the car.

All for now, thanks in advance for the help, I'll keep posting as I discover new things. Feel free to ask questions of clarification and such.

Edit: Forgot to mention, it's the #1 cylinder.

-Tyler

[Mockmaw]

I have no idea when the engine was last rebuilt (if it ever was) so the likelihood of a mechanical failure is greater than that of a freshly rebuilt car.

I realize that the problem may be one of a plethora of issues, I guess I'm trying to discover what the next step should be. Compression test? Do I drop the engine and just start taking it apart until I find the problem? Is this a good time to do a rebuild?