4/5 ain't bad Volvo V70 XC shows almost 0 compression on cylinder #3

[drgian]

A few years ago, thanks almost entirely to help from this site, I was managed to replace the head gasket on a 2001 Volvo V70XC I5 turbo that I bought for $1300. I did make one mistake, which was my timing marks were hard to read; when I put it back together depending on how you looked at it the cam was hard to place within 3-4 degrees. Nevertheless, she served us well until my daughter totaled her, rear ending an F350. The car was totaled but my kid got off without a scratch. So we took the insurance money and got her a new one (not new a 2002, same car)

Now it's time for my next daughter to get hers. I found a 2007, super clean, with 240K miles on it with a known engine problem ($1350), I assumed (hoped) it was a head gasket. I have the special tools and I've done it once so I figured I could do it again. The first car whose head gasket I did was clearly in need of one. There was oil in the coolant bottle, billows of white smoke pouring out the back that reeked of antifreeze.

This new car (the 2007) has only 1 symptom and that is a rough idle and a less rough ride. I have codes on the OBD mostly regarding misfire of cylinder #3, occasionally #1 and occasionally about exhaust. But the CEL is always on about #3.

I replaced the plugs and was very surprised to find the #3 plug burned down to a little nub so I replaced that and the coil pack on top of it. No different.

Today I did the compression test and results are
1- 150
2- 150
3 - 5
4 -150
5 -150

So we have identified the problem. Or have we? I tried a trick I heard on car talk and dropped a little bit of lucas oil down the spark plug hold to see if that would help the compression, I have a boat engine with bad compression (not THAT bad, but bad), and this will make it go away for a few minutes or hours even

So forgive the long preamble; I need to know how to proceed. But first some facts:

1 - I have the wreck of the 1st XC 70 with the rebuilt engine, it's totaled, but the engine is OK. it's a great source of all kids of spare parts.. I have my $300 back already
2 - the new car itself (2007), runs pretty much fine, it shudders a bit, but no one really minds.
3- I have a heated pole barn, I could scare up a helper or two and have done a head gasket on this sort of engine successfully before.

The questions are, is it the head gasket? If so, why no other symptoms? If it's rings or a scored cylinder why didn't the lucas make any difference.

My options as I see them

1- let my kid drive it for now, maybe she'll total it an not be injured and I can just get a new used one. Either way she just needs it from school, work, socializing and so on, we trust her any breakdown we'll come get her. I think agree no long trips

2- tear down and replace the head gasket with the engine in the car

3- tear down and re-ring the engine, have the cylinders reamed but I do not know if this can be done with the engine in the car *this is the big question I need help with*.

4- swap the engine from the wrecked 2001 into the 2007, but I don't if any changes have been make in those 6 years that would prevent that working or in general how hard it. I have a 18-19 yea old help and some adjust help (former GM people)

I'd love some advice, sympathy, help, whatever. I did buy both these cars knowing there were issues and I got them at a very good price in my market (wester MI where AWD is required) and they are very nice cars. auto climate, heated seats, crazy stereo and I've always loved the XC70. I5 Turbo with a battery in the back, how cool!

Any advice will be welcome. Please don't waste all our time with grammar or typo corrections or to tell me I shouldn't have bought this car. If you don't understand the appeal of buying a dead car, getting it up and running and watching your kid drive off on in, I would argue that you're in the wrong forum.

Regards

Gian Di Loreto

2001 XC V70 170K miles (totaled)
2001 XC V70 240 miles (works fine)
2007 XC V70 250 miles (blown engine)
2014 For Flex 350 turbo (twin) V6 350 HP
2018 Lincoln MK Z 1.4 turbo (she makes up in style and accessories what she lacks in sped)