my project is underway! over the weekend i managed to remove the engine/trans. assembly and get the hulking beast on an engine stand in my shop (carport- yes, its quite cold out!)
i decided to pull it after learning that the compression was horrible in 3 of 4 cylinders and that the thing was slowly leaking oil from the crankcase at various points. i decided to remidy all this in a month or so long engine-out excursion.
this is what i know to be true:

1. my engine has bad compression (not enough to start)
2. this can most likely be due to either a bad cylinder head (valves), or wear between the cylinders and pistons themselves. i have not yet decided which of these two causes is the problem.

my question:

how do i distinguish which of these problems is the cause? it could be both (i hope not) but i would like to know what to look for when examining the head and the piston/cylinder relationship. i should have stripped the entire engine apart within the next few days, so i will keep you posted.
also, does anyone know a general monetary figure on getting a 240d cylinder head reworked? thanks for all the input fellas. i await your knowledgible replies.
william gum