Bloody hell Dave - Markie and I (with TB taking the piss nearby) changed the HG (and probably manifold gasket) shortly before you had this car.
I'd have thought if it had overheated that badly - you'd know about it :-?
Can you get the garage to confirm the exact compression readings and their reasons for diagnosis?
I wouldn't be so sure myself...
One thing that hasn't helped me know about overheating is the temp gauge didn't work for ages. Discovered late on that it was only because the spade connector had come off!
I think that, coupled with the fact i've only really done city driving means the engine hasn't worked very hard this year. The trip to London/Leicester last weekend was a slog on the motorways and I think it was the last straw. The wiring on the crank sensor was apparently all mangled up and may have thrown things off too? The pinhole on the top of the radiator plastic has leaked on and off ever since I had the car but I had thought I was keeping of top of repairing it & topping it up. obviously not well enough

In all this I have kept telling myself, this shouldn't be happening to a car that was maintained/rebuilt by OOFers little more than a year ago. Maybe the law of Sod is against me!
I can ask about compression readings, but they did mention that when they stuck pressure down one cylinder, it came up the other, and that was with all valves closed. I'm really not aufait with these testing techniques. But I recognise a broken gasket when I see one! I think the exhaust gasket only went as the manifold had warped slightly due to the heat.... :-/
That all sounds very expensive Dave with a garage doing all that!!

I don't have the final bill yet, and yes it will tot up to a fair whack. Amazing how little somethings add up, I'll post me costs when it's all sorted

They did mention about £150 labour for taking the head off, skimming, 'doing' the valves and reassembly.
It's a father & son team in a double garage in their yard at the back of their house so they have lots of time and a great willingness to attempt slow jobs. I think the costs go up if you're in a hurry! They're professional but sometimes in an old school quirky manner. Our family's been dealing with them for twenty years so it's a good relationship and they live less than 2 miles away

They've even started to accommodate me getting cheap (TC) parts from Vx with them fitting them, or cleaning up jobs after I've got me hands dirty starting them! Like when I changed the wishbones and tierods and they did the pig of a rear bearing

Don`t know about having your 'head orf'; it must be doing it in too! 
Hope all`s soon well Dave and `not too expensive. :-/
Thanks for the wishes

I think the trip to Newquay has helped me chill out over it, but yes stressing was very much on the menu. I think it came through some posts last Monday morning!

Anyway, I don't know the full costs as yet but overall I don't think it'll be too huge for consumables and a running repair to keep the gas beast going for another year.
Sorry James, but I think for now I'm keeping her! And yes I'll pass on any data I get

TTFN.