You can read about doing a compression check on the main site in the FAQ section. I guess I need to put it in the engine section as well so it is easier to find. Any how, here is what it says:
Question: How do I do a compression check?
Answer: A compression check will give you a good indication of the condition of your motor. It is best to warm the motor up before doing a compression check. If you cannot get the motor started go ahead and do the check any way. Below are the steps for doing a compression check:
1. Remove the high tension lead from the coil to the distributor.
2. Remove all of the spak plugs marking the wires as you remove them.
3. Remove the air cleaner assembly and prop the piston of the carbs wide open.
4. Install the compression checker into spark plug hole #1.
5. Crank the engine over several times and jot down the reading
6. Do this for the other cylinders writng down the reading each time.
All of the reading should be plus or minus 10 PSI of each other. An example would be #1-170, #2-175 #3-165, and #4-170. These would be considered okay. Ideally you want them all even but realistically that rarely happens especially on an older motor. If you have a really low reading that indicates a problem. It could be worn rings, valve not seating, or a bent pushrod to name a few.
Next we will do a second set of readings with a squirt of oil in each cylinder. The procedure is the same as above just squirt some oil into the spark plug hole before you install the compression checker. Write down the readings once again. If the readings stay low out of spec you may have some issues with your head. You can try adusting the valves but if that does not remedy the problem. It is time for a valve job. If the readings go up then your rings are worn out and need replacing.
That pretty much covers doing a compression check.
A freshly rebuilt R16 should give you readings around 175 PSI. I would not expect that on a used motor.
Steve