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I agree with Poolman. Perform the simple, cheap procedures first before going to rebuild.
Low compression could also be caused by carbon on the valve stems. Do you run at high rpm occasionally? When was the last time you performed an Italian Tune-Up (caveat: make sure you have a good timing belt system and fresh oil before performing this). These engines need to be run at high rpm ocassionally. If they're not, the valve stems can get carboned up causing the valves not to seal as well as they should. The result: low compression.
DEWFPO
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1998 S90 077,400 and 1995 964 154,100
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