I'm prettty sure your core problem, sort of as I suspected when you said lining up the pins was a problem, is the engine is/was out of time for whatever reason and if I recall Sir Sam's comments correctly that 1st shop's finding was a big hint and I think the odd compresssion may be another. Based on just that 1st shop's finding I'd have immediately said check timing. Now I'd suggest a PM or email to Sir Sam to confirm. If I am correct you probably don't need to go any further into the engine, other than getting it back in time of course and putting on a new timing belt. However, if I was you and was in this far I think I'd do the water pump and for that you need to borrow the cam holding tool from GDE or a nearby member or fabricate an equivalent.

My gut guess says Hoosier CRD is right on intake/exhaust side but since you have the Miller tools if they are not marked "I" vs "E" (my boxes are not that easy to get at) I can tell you that Miller 1052 (the long one) is the intake pin and 1053 (the short one) is the exhaust pin. I agree with his "answers a question" hint, the bad roller and crushed lifter would have caused that cylinder to do very weird things regarding compression and blowback thru the intake

As far as I know the rocker bearings should have essentially zero play and you hint/suggest that other rockers have play and at least 1 has more than you would like. As I noted earlier the rocker bearing is designed to collapse if the engine is out of time so I suspect you have several more if not all 16 rockers with collapsed bearings and possibly trashed lifters. Best carefully check them all and chat with folks that have delt with this issue like Sir Sam or are dealing with it like msilbernagel. IIRC new rockers come with new lifters although they can be obtained separately and I think I also recall several folks on the forum having rockers/lifters left over from their top end over hauls.

Hope this helps but stay tuned for 2nd opinioins.

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Sold to LOST member my 05 Ltd, GDE Stg II turbo + TCM tune, SunCoast TC w. Transgo kit, Steiger window regulators, Samcos, Fumoto valve, 2nd gen filter head with Lub. Spec. bleeder, Hayden clutch & 11 blade fan, inverted spare, P-1 battery, BF Goodrich Long Trail TAs, Etecno1 glow plugs, timing belt at 50K miles/8 yrs

those rockers are exactly like my bad ones, there should be no play at all in the needle bearings.

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