603 valve seating

[dieselbenz1]

Ok I have a 603 engine that I picked up some time ago and went through every bit of it. My issue is with the machine shop who I had skim it, install new exhaust guides and re cut the valves. With the head installed she smokes white, did a compression test all sitting around 400 psi no. 1 being the lowest 350. Leak down shows significant losses past the valves. I removed the head and returned it the vacuum test indicates it holds at 20 inches.

Its a small shop but they are unwilling to understand vacuum testing and insist since they hold 20 psi, (I dont know how to argue with stupid) everything is fine. I then lapped the valves but same issue leakage past valves and now I'm beginning to think maybe the head isn't flat. They tell me just to run it but after several hours of running it with no load no change.

Not really sure what to do now but not to keen to return again. So she has been sitting. Is it normal to have to run the engine presumably under load to actually seat the valves?