Cool, compression is good. You'll need some odds and ends to make a pressure tester. There's a few different ways to build one, but basically they all work the same. Block off all intake and exhaust paths and add air, Watch t o see that it maintains ~7 psi for 5-7 minutes, if not use soapy water to find where the air is escaping. This will be the spot air is entering when running
I'll describe mine. In the photo (sorry, that's all I have...for now) you'll see the exhaust block off plate. ...OK steps first.
1. Remove exhaust pipe
2. remove carburetor (pull the carb from the rubber intake boot...leave intake on cylinder)
3. remove air pulse line (air line from fuel pump to cylinder) from fuel pump end.
Now, you need to block all of the above, and add air into the engine through one of them, with an air gauge on it.
Back to describing mine. I made and exhaust block off plate. I remove the exhaust and the exhaust manifold (three bolts holding the manifold "ring" to the cylinder that the exhaust mounts on). I then bolt on the exhaust block off plate with a thin piece of rubber between the plat and the cylinder (inner tube type rubber). My plate has a threaded hole in the center to which I have plumbed a "T" into it, from there I added a pressure gauge, and a schrader (tire stem valve) valve on the other leg of the "T". So this is my air entry and gauging point. I have made up an aluminum plug to go in the carb boot in place of the carb to block off that point. I leave the spark plug in. And I either fold the pulse line over and vice-grip it or put a small bolt wrapped in Teflon tape into it. Then just use a hand pump and pump it up to ~7 psi and then watch and listen of leaks. Use a spray bottle with soapy water to locate the leak(s). Since Sarah's is stock and untouched, I'm guessing the rubber carb intake is old and cracked. But it could be the head gasket, base gasket, as well.
Now before I had those parts made I had used odds and ends previously, whatever works will work
A small bottle of STP Sun of a gun filled with water and frozen fits snugly into the carb intake boot :p You can get from plumbing stores expandable plugs to use in the exhaust manifold (leaving in place on the cylinder, compared to my method of removing it) and carb boot. Then get fittings and plumb in a gauge and valve into the pulse line. As I said, whatever works, spray your plugs and fittings to ensure they're sealing properly.
Locate the leak and report back