What's the best way to find a dead cylinder?

Yeah, it's pretty bad. You saw the photos of the leak down test on the actual gauges. And yes, the testing was done correctly by a very experienced shop that builds racing engines.

And you can vouch that each cylinder had the piston at the top with both valves shut? You saw it? I just still cannot believe those numbers. Buy your own tester and check it out. Just my opinion...