I went down to the shop and adjusted the valves according to a a tech article online through Centry Performance:

Century Performance Center, Inc. :: Adjusting Valve Lash

I went behind and checked the compression again and see noticeable results already. There are a few cylinders I want to tweak to try and get a higher compression out of though.

Comparision results are as follows:

Cylinder Before After
1 0 124
2 a few psi 130
3 a few psi 117
4 a few psi 100
5 a few psi 125
6 107 120
7 a few psi 110
8 a few psi 135
* I noted most cylinders as a few psi because it wasn't even enough to really register on the gauge.

Now that the valves are set correctly it is running a lot better than before. It's actually running smoothly and firing on all eight cylinders. The squeak from the valve terain is gone on the right side. The backfire is not there anymore, that I can tell of.

I remember that I had paid a pretty penny for those heads. They are rectangular port aluminum heads. I don't know for sure but I'm thinking the valves are stainless? I rather do it right and have it run correctly. I wish I didn't have to pull the heads again and have to reseal and reset all the valves again but the second time around shouldn't be such a pain in the @$$.

What needs to be done to the heads to fix/improve the compression?