Yes, one cylinder has no compression. As I feared. Here are the circumstances:
'68 SE (gas w/ mech FI) purchased last October.
Burned a quart of oil every several tanks of gas; no drips under parked car; slightly smoky exhaust with blue puff every now and then.
Plugs 5 and 6 particularly cruddy, especially 6.

Ran great two weeks ago. We drove 1200 miles South to southern California, via Interstate 5, for the holidays. Maximum speed was 95 MPH on flat boring stretches mostly 82-87 MPH through mountains and cities. (Pleasant Driving)
By the time of our arrival, oil consumption increased to about 1 quart per tank of gas and has remained at that level.

A side trip to the mojave desert (about halfway to Las Vegas from LA) was taken and there were some stretches where I drove about 100 MPH for several minutes, never over 103 usually 92 or so, although if I had to pick a favorite all round speed, 87 MPH seems to be where I find the smoothness to overall noise the most pleasant.

A short foray on sandy, bumpy dirt roads and the engine sounded like it needed a tune up. Sounded fine at high speeds so we drove it back to where we were staying.

The next day we left for home. There was a strong gasoline smell and I scraped the deposits off of number 6 spark plug, which was completely fouled. and it seemed to run better and was fine at higher speeds. the gasoline smell dropped way off. By the time we hit northern California I noticed the temperature climbing and replaced about 3 quarts of coolant.

Well up into the Siskyous (mountains) we stopped in Weed for the great Barbeque they have there and put in gas and oil and more coolant (even though it was snowing it got too warm as coolant was disappearing). Replaced #5 plug with a new one. The electrode arm was gone! We spent the night in southern Oregon. I didn't sleep well.

In the morning I decided to limp it home. We put in all fluids plus some radiator stop leak pellets (which stopped the coolant from disappearing). No water in oil or bubbles in radiator. #5 plug seemed to be firing and getting gas but not contributing (pulling off plug wire at idle produced no discernable change in rpm).

Horrendous rain most of the way home. at higher speeds you'd hardly think anything was wrong. Dramatic scenarios of destroyed heads and valve trains haunted my imagination.

Replaced the plug wire with a good one when we got home. No change.

Took a compression reading today. All cylinders had a normal build up pattern and close readings ( 166- 172 with a worn out O-ring on the compression guage so they might be closer and higher) except for #5 which had about 5 lbs. My biggest fear was adjacent cylinders might be firing into each other. Glad that's not the case! All plugs looked normal. I gave it a pretty thorough tune up with lots of new ignition parts about 6-8 weeks ago (see thread on ignition/injection mystery).

I don't claim to know much, but my guess is I need a new head gasket and some valve seals. It's difficult to imagine where all the oil is going. I don't think she's seen those higher RPMs for many years and some of the old gaskets and seals are not up to it.

Any advice on who to buy a head gasket from? This might be a good chance for you Mercedes Detectives to guess what I'll find when I pull the head and certainly I'd appreciate any advice concerning the operation as I am not too experienced. I've read enough to feel like I've done more than I have!

I don't feel like this is a serious problem. I hope that's true!

Thanks and of course I'll let you know how it goes. I'll be looking for a headgasket tomorrow.

Basil