You said the valves not involved. How did you logically rule that out? A burnt valve can certainly cause a leak and thereby low compression. Did you perform a leak down test? The cylinder can make a tapping noise from the overfueling of a broken injector tip. It also means you would see excessive unburned fuel out the exhaust.
I think you need to pull the head off.
Well, here we are back again. I'm posting this update because I figure it might help someone else to know what happened and maybe I might discover my options are better than I thought for fixing this.
The #1 cylinder is melted a little around the edges. Based on what I have discovered, I think the engine may have started leaking the oil possibly through the rear main seal, the back of the engine was soaked with oil everywhere, but no obvious source. There was more on the RMS and bottom of the transmission bellhousing however, it did seem to be coming more from that end of the engine.
The turbo seems solid and will be getting transferred to the replacement engine for the time being. The cylinder head looks great, the valves are all where they should be and I wouldn't hesitate to put this head back in service.
The injectors (recently re-worked) are now in the replacement engine along with the pump, and it was obvious from when I drove the car into the garage (Yay, no more effing with the HOA, and I can work in peace!) that the #1 cylinder wasn't firing at all. The newly-reworked injectors 2-4 had fresh carbon on the tips, while the #1 is still shiny chrome. But that tapping noise was also gone, so I suspect it had just been poor combustion in that #1 cylinder.
I will be finishing the motor swap this weekend, then the decision time starts about the old motor. Can just one piston be swapped? Is it even worth it? The engine has 360k miles on it, but the compression on the other cylinders seemed great at 480 and 460 460. Is there any way to re-check the compression without getting another starter from a junkyard? (there's no transmission on that engine obviously)
I've got a nearly-complete motor that would need some TLC and parts, and I wouldn't mind having a spare motor just in case.