sanjeevv1

Hi guys, hoping someone can shed some light on next steps for me on this issue. I have a 2008 Outback 2.5i with 112k on it. Done nothing to the car except change clutch at 96k and replaced spark plugs at 96k. So I'm driving down the freeway and all of a sudden there's a short squeak from under the hood and I notice a drop in compression. Compression drop is more noticeable at lower revs that at higher revs (can still feel it at higher revs too, but more noticeable at lower revs) Limp home, get the scanner out and there's a P0303, misfire on #3. Took out the spark plugs and there was oil on the boot, and like a thin black thread on the plug gap (like a carbon/oil thread). So I changed the valve cover gasket and plug seals, cleaned out the plug. Run the car for a bit but code stays on #3. Take out the #3 plug and now I smell (and can touch) gasoline on it. For some reason its not getting hot enough. Swapped the plug and plug wires between cylinders #1 and #3, code stays on #3. Thought maybe its the ignition coil (the primary coil resistance didnt appear to be right) and I was getting a good deal on Amazon so I changed the coil. Code stays on #3. Checked out the injectors, seemed to be firing OK when listening with a long screwdriver. But I swapped the #1 and #3 injectors just to see if the code moved. Code stays at #3. Looked around, visually and by touch for leaks in the hoses etc. and didnt find anything. Now, I was officially out of ideas, since the only code it was throwing was P0303. Then I took it to a shop and the guy does a wet dry compression and leakdown test. He tells me that I need a valve job. He says carbon deposits on the valves are not allowing it to seat itself properly, which is creating a loss in compression (he says the pressure in #3 is about 50 psi compared to 130 psi for #1). He also says that at higher revs the valve is able to open and close better because things are happening at a faster rate, but at lower revs they valves are not able to open and close properly so its more noticeable. The overall tab for his labor is $1500, plus the machine shop will need $400-500 and then the head gasket set and whatever else. This is northern California in San Jose. He has charged me $400 to replace my clutch which I thought was a very fair price. The questions I have are 1) Can something else be done before a valve job is attempted to fix this issue. e.g. the valve lash/clearance adjustments etc. should that be attempted first (I am a not an experienced mechanic even though I did change the valve cover gasket, I could have checked the clearances and adjusted then, but I didnt since I thought the oil leak was the problem) 2) If the valve springs are worn, can that be fixed without taking the head off 3) If its the carbon deposits that are the issue then the Motor Medic Motor Flush product claims it can fix sticky valves and generally the reviews on Amazon are pretty positive. Can this be a potential fix? Or am I gonna make things worse 4) The napaonline website says that pouring a 1/3 can of SeaFoam down the brake booster vacuum inlet is something to be tried. What do you guys think should be my next step..? Really appreciate any input as I'm not able to fork down over $2k for a valve job, but I do need a smog test which wont happen until this issue is fixed. Thanks a bunch.