It could be a stuck or broken intake valve (or a weak/broken intake valve spring) allowing air to blow back through the intake path on the compression stroke. I'm thinking this may interfere enough with the air/fuel flow to the other cylinders to keep the engine from running at all.
When you say the valves are moving, do you mean the actual valves or just the rocker arms? Do all the valve stems follow the rocker arms all the way up when the rocker arms rise?
I would second El Toro's assertion that a compression check will tell you a lot at this point. A compression check with good results would be pretty strong evidence that the valve train is working properly.
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