Did the camshaft gear and the crankshaft gears come "unmeshed" at any time during this operation? Or,.....did you check the timing marks on the two mating shafts to make certain that the camshaft timing was correct? An "out of time" camshaft can cause low compression, and might even lead to bending a valve if the piston strikes a valve as a result of the mis-timing.

Yep, ya probably got it out of "time". Those gears look like they are in the correct position, until ya slide the crankcase cover back on, and they assume the identity of a snake laying in yer flower bed--they quietly slip out of position, and you are left with the job of getting it right. Might as well take it apart again!
If the timing gear doesn't want to stay in mesh, try this:

put the gear timing marks where they belong, then tie a light piece of string around the crankshaft and timing gear shafts, and reassemble it.
Sometimes, a worn casting "boss" in the engine base allows the timing gear to lean out of mesh! Of course, you can't see it when the case slides down, and you have to trust that ya get it right!

This sounds like what happened. I didn't even pay attention to timing marks when I put the cover back on because I felt sure that nothing moved. Oh well, I don't claim to be an expert mechanic but was trying to save $$. I will pull the engine back off and try again. Does anyone know exactly where the marks are located on this engine? Also, do I need to look for TDC and if so, which valve (exhaust or intake) should be open at TDC when I line up the marks. Any tips or links would be very much appreciated. Can you explain the "string" procedure a little more. Thanks.

Mownie, I didn't answer your question entirely. The cam and crank gears did not come unmeshed to my knowledge, unless something moved as I put the cover back on. The only gear that I know moved was the plastic governor wheel that comes off with the cover. I did spin it to makle sure it spun freely, but I did not mess with cam/crank gears. really has me puzzled. Thanks.

Does anyone have any thoughts on a possible sheared flywheel key before I yank the engine back off? I don't know how it would have been sheared, I was only working on the lower end of the engine, but someone advised me to check that first. Is there any way that I might have tightened the clutch/crank nut too tight and sheared the key on the top side? Just asking, engine removal is a big job for an idiot like me. Thanks.

Thanks everyone. Apparently the cam gear moved when I pulled the crankcase cover off the FIRST time. I lined up the cam/crank marks @ TDC and it runs like a dream! I was elated until the phone rang and I learned my brother-in- law of 30 years was cutting a limb on a ladder, limb hit the ladder and he fell 20 ft to his death. Sort of puts things in perspective. Thanks again to all and happy birthday Rusty on the 14th.

Hey, thanks for the birthday message! I'll be 85!
but, sorry to hear about your Bro-in-law! Those accidents do tend to happen when somebody isn't paying attention, or didn't expect it to happen like it did!
Rusty J.

Happy Birthday Rusty, from your long lost nephew in Florida! Dad is not far behind, he'll be 85 New Years eve.

Here is a link that might be useful: My Website