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Just pulling the rope on a logsplitter is hard to determine whether you're feeling compression, or the pump trying to pump oil. Same with a generator, not only are you pulling over the engine, but you're spinning the 100 lbs rotor/armature also. I have the same type engine on a chipper shredder, and sometimes the centrifugal clutch sticks, and boy is that a lot to spin over with a pull starter.
Anyhow, make sure the choke works, and also that the bolts are tight on the carb and intake.
This engine will also have a compression release, so a compression tester will never give you an accurate reading. Best you'll get is about 80 lbs. If you have less than 50, then you have compression troubles. A leakdown tester would tell you much more than a compression tester would. Its a bit more expensive, but the leakdown tester would tell you where the compression is leaking to. You'll need a air compressor for it also to pressurize the cylinder. Could be worn rings (you'd get blue smoke when its running though), or valves that aren't sealing properly. Electronic ignition won't hurt any, but a motor with good points should start just as easy. Check and make sure you have a good blue spark. Points are probably behind the flywheel. you can convert it without having to remove the flywheel.
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