I did a little investigation tonight. The "bad" 20" motor has compression 135-135-130-128. The head was definitely off and had a new gasket put on. There is a watermark near the bottom of the head, but I think it is coming from one of the gaskets at the bottom of the motor, just underneath the head. I have a feeling they replaced the head gasket hoping that it would fix the problem.
The cables on this thing couldn't have been adjusted right either. I unclipped them and the end was loose on both, and the gear selector cable end actually fell off when I was pulling it out so it couldn't have been on more than a couple turns.
I'm going to mess with the "good" 25" motor tomorrow and see what it tests at. I may throw it on the boat just to get in the water while I yank the "bad" motor apart and try replacing some gaskets.
Does anyone know where to get a service manual for these things?