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Saabu ----You have no idea how the electric primer works.----Note---It is a valve and not a pump.----Impossible to puke out 1/3 gallon of gas during a start attempt.
There was a service bulletin in 1994 to move tell tale fitting from the side of the block to the top of the block.-----I would be taking the head off to look at cylinder walls.----At 85 PSI there might be serious issues.
Some will argue----Step #1 is a compression test.---Post the actual numbers here.-----Does tell tale hose come off the side of the engine block or off the top ?
If it still has the original head gasket you might consider removing it,------The new gaskets are improved.---Sierra is the best deal.----Inspect thermostat as they are often stuck open or missing.
The original mix was 24:1 on those.------But 1961 was the first year for needle bearings on big end of the rods.----So internally there is no difference with a 1965 model ( now rated at 6 HP ) that ran on 50:1 mix.----Another lively oil debate.