low cylinder compression
 

I've got 71 2.8 mercedes 6 cyl with low compression (130) in just one cyl,
compared to 140-150 in the others. Unfortunately cyl on either side of the low are 140 and 150, worried about that imbalance . Overheated at some point- machined the head, new gasket ,no valve work just re-set. Walls of
cyl #5 are not nearly as clean as the rest

There is no im-balance there
 

You are close to the 15% allowable difference in compression between cylinders. One cylinder is slightly less efficient as you read it then the others. But it is still putting out a lot of power. If you just did the head work described, I would begin to drive it and get some miles on it. Then ninety days down the road check the compression again. You might be surprised at the reading you get.

Did you rering it ? If not try using some engine flush and retest after an oil change.

Retorque the head and then do a comp test. Then do a leakdown test.

great thanks for all the help!