OP, it sounds like your on the right track, BUT it sounds like someone slapped the engine together and didnt know what they were doing.... that scares me!
get some strong batteries in that thing, get the valves right and MAKE sure you go ahead with the compression testing tool before throwing a nice set of sticks back in there.
and x2 on the marvel mystery oil. ive seen it work on ATV's several times.
also if you have the time with all the sticks out, take a barring tool to the flywheel and feel for possible bad spots in the rotation.