<VV> Greenbrier engine problems - long post

[Kinzelman, Andy]

Guys,
A friend of mine has a Greenbrier whose engine went south.  We swapped in another engine, & it ran well.  However, he took it up to a regional swap meet, & on the way back it started to run crappy, then it filled the van with smoke.  At that point, although it still ran (sort of), he left it on the side of the road.  It had obviously been leaking oil at a substantial rate, because the state trooper couldn't fasten an abandoned vehicle sticker anywhere on the back of the van.

We dragged it back down here.  I figured there may have been a problem with the valve train, so we drained the oil (only got out about one quart, at best) & adjusted the valves.  After putting in oil, we started running it.  It was still very unhappy, so we did a compression check.  The numbers are: 1 - 120. 2 - 115, 3 - 30, 4 - 0, 5 - 0, 6 - 0.  I put my finger over the #5 plug hole, & couldn't feel much air pumping out, either.

Any ideas what is wrong?

Last question; figuring the engine has to come out, is there any problem flat towing a Greenbrier with no engine in it?
Thanks,
Andy K.