I picked up a new project car, 2003 D2 with 140k miles.
Has a cylinder 3 & 5 misfire, and shows no compression registering on the gauge.
I didn't drive it very far or run it long, but it did not overheat (temp gauge was level) or smoke out the back, and there is no oil/coolant mixed.
The previous owner had the head gaskets done at one point.
The plugs looked a bit oily, not steam cleaned.
The coolant expansion tank was low when I bought it, but not empty.
The only codes are for the Cyl 3 & 5 misfire, nothing else.

My first thought is it has a cracked block.
Could it be a cracked/warped head, or is it most likely the block?
I bought it assuming I'd need to replace the engine, but would like to be 100% certain first.

 

Could also be damaged valves and/or pistons, which would be relatively simple to replace. Certainly much easier and cheaper than switching out the entire engine.
I would be inclined to pull that head off, no matter what you end up doing. It's likely to be the simplest way to identify the issue with any degree of certainty.