Steve: That compression reading is good for a SA. I'm running a couple of those with lower compression. I suspect as DCW told you, there are stuck rings.
You say the engine is dirty and you recently bought the tractor. I take it, you don't know history use, last time engine rebuilt, oil being used, etc. Is that oil ND-30 a detergent oil? Personally I'd work it for 8-10 hours, drain it and add new oil and filter, and keep changing it every few days until it stays clean, but use detergent oil, it cleans them well and keep using it. Another item I've done for stuck rings is penetrating oil in the spark plug holes, let it set 3-4 days then crank the engine with plugs out to blow out any excess penetrating oil. Then fill it with new detergent motor oil and add a pint of STP motor job in a can.
I'm not saying this will be an end all solution. It can't hurt anything at this point, and you may get years of service from the tractor without a major overhaul. You may find yourself rebuilding the engine by this time next year.
I did this with my 130, 15 years ago, it still pulls as well as my SA or 140 and they are in excellent condition. Both very low hour tractors, however my 130 is not. It has been rebuilt twice and seen a lot of hard work. Several years since the cleanup my 130 has been used enough to burn 500 gallons of gas per year. I still use it to do all my nasty hard pull jobs, as I want to keep the other two well preserved.
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Today's Featured Article - Identifying Tractor Noises - by Curtis Von Fange. Listening To Your Tractor : Part 3 - In this series we are continuing to learn the fine art of listening to our tractor in hopes of keeping it running longer. One particularly important facet is to hear and identify the particular noises that our
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