I've got a '97 6.5L sitting in my shop that had zero compression on cylinder 1. I mean zero. With the engine running, I was able to remove the glow plug and keep my finger over the hole with little resistance. The owner didn't want to fix it, so I bought the whole truck for parts. Still have the engine. I have yet to tear into it to see what the actual problem is. I suspect broken piston or rod... I had a gas engine bust a rod in half one time that left the piston shoved up in the bore, but not enough of the rod was left on the crank to cause it to get wedged anywhere and lock up the motor.
Casey
1995 K1500 Tahoe 2 door, 6.5LTD, 4L80E, NP241, 3.42's, 285/75R16 BFG K02's; 1997 506 block; Kennedy OPS harness, gauges, Quick Heat plugs, and TD-Max chip; Dtech FSD on FSD Cooler; vacuum pump deleted, HX35 turbo, Turbo Master, 3.5" Kennedy exhaust, F code intake; dual t/stats, HO water pump, Champion radiator; Racor fuel filter