With the engine together, get a compression test hose with a compressed air type snap on fitting like this

Use the hose to pressurize the motor, one side at a time and listen for the air leaking out. You should be able to hear whether it's mainly leaking down one of the ports or past the rings. Repeat on the other side and report back please.
I suspect that the head will have to come off to have the seats and valves professionally cut.