You should be checking compression with the throttle held wide open or the carb off. If not, the engine will draw vaccuum on the intake and you will get a low reading, or you will have to crank for an extended period to get an accurate reading.
If you have determined that the compression is actually low then you need to find out where it is going. Lock the crankshaft from turning with the piston at TDC (a penney between the clutch gear and the crank pinion gear is a good way) and pressurize the cylinder (a rubber tipped blow gun on a compressed air hose is how I do it). You should then be able to determine if the combustion chamber is holding pressure or if it is getting past the valves or the rings. Once you know where the pressure is going, then just figure out why.
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