93 90CS Quattro Trouble

[nitrotechnician]

Hello Folks- I've spent some time on AF talking about Jeeps but this is the first venture to the Audi pages. Anyway. A friend of mine has a really good looking 93 90cs quattro 2.8 2771cc with 160,000 miles.
He was looking to sell it before he moved overseas this week. Bad news is last week the car sputtered when he stepped on the gas. My gut reaction was fuel delivery but he took it to a german car specialist and they gave told him it was worse. Here are the details pretty much as it is written:

#2 &3 plugs fowled
Checked compression on cylinders 1-3 (210,20,20)
leak down test at 2 &3 95%
says on his paperwork may be a failed head or gasket.

He says he just had the heads worked on (probably just seals and gasket I have to look at the paperwork first) in the last year or so. He has also had the timing belts recently changed so hopefully there wasn't any timing issues causing valve damage. He's gathering the work receipts so I can see if there were any warranties on this service.

My questions: He is leaving and wants to give it to me in the hopes that I can fix it and buy it from him ($2000). I've rebuilt the heads on carburated inline 6 cylinders not FI stuff but I'm not scared to dive into it. Anytime I've blown a head gasket there is evidence like coolant in the cylinders and stuff but nothing like that here other than the figures above. Is headwork the right direction? Is there any common symptoms these cars experience that I should look out for? It's been my luck that when I take a head off I always find something way worse. If that is the case is it worth a complete engine rebuild? Calling around it seems that the parts are super expensive compared to the Jeep stuff I normally buy. Will any of the later engines 2.8 or otherwise fit in this car (I found some later model Audis that were wrecked I may be able to pull parts from) I'm just worried that $2000 plus a rebuilt engine is going to be more than the car is worth (has a $4000 value KBB if ran well)- even though everything else on the car is very immaculate. Lastly Is the 90CS quattro referenced by any other name? I did a forum search and found very few threads on this car. Thanks for helping.