1. How do you KNOW it's getting fuel? Cracking the throttle plates open and seeing a wet manifold doesn't mean you're getting the proper amount of fuel. The engine could easily be flooded with fuel, or in the worst case, water from the bottom of your fuel tank (STABIL won't stop condensation in a non-full tank over the seasons). Install a starter button or have an assistant crank it while you look in the carb to see what's going on, and run it off a separate container of fresh gas. Be careful because if it does try to light off and it's on a lean condition it'll backfire through the carb, do don't hover with your face right in there. Have the assistant pump the throttle and verify two solid streams of fuel coming from the venturi cluster. If after during or after cranking you can see fuel anywhere the carb is likely flooding the engine. The idle circuit delivers fuel under the plates so you will not see fuel while at idle.
2. Were the spark plugs rusty on the tips, where the electrode is, or up near where they meet the head on the outside of the engine? It's pretty common to have rusty plugs after a season on the outside; never common to have rust past the threads on the inside. That would indicate water intrusion, likely from a failed riser or gasket. I'm dealing with the consequences of just that right now, but it happened at the beginning of this season and we caught it before it did any lasting damage. If yours sat with water in it, that's not good. The oil of course would not look milky. It's had five months for the water to drip past the rings and go down into the bottom of the pan. They wouldn't mix until you cranked it for a LONG time or the engine ran. Drain some from the bottom. If there's water, you have your smoking gun.
3. Verify your compression tester works correctly. How many cranks is it taking before you stop cranking the engine?
4. It could be you just need a head rebuild or a new head. My engine didn't hydrolock when it got some water in from the exhaust valves. I did discover that it needed a valve job regardless so I pulled the head and did all that (plus a port and polish). You wouldn't know that until you pull the head and at this point it wouldn't be a bad idea.
What my engine ended up needing, total, when it hadn't sat all winter: New riser, SHOULD have bought a new manifold but I ran out of cash, head surface decked .010", valve seats ground, new valve seals, head and manifold gaskets and new manifold drain. I also had to rebuild my carb as it was fully clogged up with salt-like deposits.
