You say that the bottom cylinder has compression, fuel, and spark... you are mistaken about one of those areas, otherwise it would certainly fire.
Spark plugs should be Champion QL77JC4 plugs gaped at either .030 (long life) or .040 (super strong spark)
The timing is set by the flywheel key keeping the flywheel and the crankshaft aligned. Unless that key is sheared (usually due to not being torqued to 105 foot pounds), the engine is in time. Even if the key was just halfway sheared, the engine would not run at all.
Having the proper spark can only be determined if the test id using the recommended procedure of having the spark jump a 7/16" "Air Gap". The spark must jump that 7/16" air gap with a strong blue lightning like flame... a real SNAP! Does it?
********************
(Spark Tester - Home Made)
(J. Reeves)
You can use a medium size philips screwdriver (#2 I believe) inserted into the spark plug boot spring connector, then hold the screwdriver shank approximately 7/16" away from the block to check the spark or build the following:
A spark tester can be made with a piece of 1x4 or 1x6, drive a few finishing nails through it, then bend the pointed ends at a right angle. You can then adjust the gap by simply twisting the nail(s). Solder a spark plug wire to one which you can connect to the spark plug boots, and a ground wire of some kind to the other to connect to the powerhead somewhere. Use small alligator clips on the other end of the wires to connect to ground and to the spark plug connector that exists inside of the rubber plug boot.
Using the above, one could easily build a spark tester whereas they could connect 2, 4, 6, or 8 cylinders all at one time. The ground nail being straight up, the others being bent, aimed at the ground nail. A typical 4 cylinder tester follows:
..........X1..........X2
.................X..(grd)
..........X3..........X4
This can obviously be modified to a 6 or 8 cylinder setup tester.
********************