Well, I have no way of knowing what your valve timing is.But I can tell you that you need to re-set your camshaft end play by using the proper gasket thickness and the appropriate thrust washers on the ends of the shafts. This is indicated by the fact that the engine rotation gets stiff when you tighten the timing cover.As for the compression, who knows?Try doing a compression test.
There are several gaskets available for the timing cover.You need the one that was originally on there.If you don't have it, then you have to do the camshaft end-float procedure.It might be a good idea at this time to get a comprehensive service manual.I sounds to me like you are going to need it.
At this point, I do not know what was on there originally, I believe I now have a bit of a basket case. I definitely agree on the service manual, what is a good source to get one?Do all of the RE 350s of this vintage have the spring washers on the cams? If so, I'll need to source those, too.