NormK,
First question is how much compression? Finger over is plug hole is not a valid test. As with side valves the ACR can become over active at start-up due valve decrease clearance. This is usually a cause of shut while running but sure a give you fits when trying to restart.
Since spark plugs can and do fail under compression load, you have tried a known good plug? They will spark fine out the engine even when bad if they are under compression load. Also if testing without a plug the coil high voltage should be able to jump a .150" spark gap when is turned @ about 350 rpm.
Flywheel don't usually shear if the flywheel is properly torqued; unless, you hit something with the blade. As for if the flywheel key is sheared a quick test that doesn't require a lot disassembly is to remove the engine recoil shroud and spark plug. With these removed insert a wooden dowel through the plug hole and bring the piston to TDC. Now with the piston at TDC look at the flywheel magnets and coil legs alignment. They should be fairly align. There will be a slight mis-alignment but not much. With practice you will get a feel for when the flywheel keys are sheared by just checking this way and save having to remove the flywheel nut or ratchet starter. If you do remove either one do torque them back to spec which should be 55 ft-lbs. Under torquing will lead to key shearing or over-tightening can damage the flywheel.
