I have a 2002 325 Magnum that will start up just fine, but after a few seconds will start to run poorly and smoke. It has no power and barely moves - almost like the reverse speed limiter is kicking in. I was told it had low compression but when I check it I get 85psi. Per the service manual I have, it says the 500 should be 70-90psi and the 325 should be 140-160psi. Everything I've read online says 70-90psi, but the manual disagrees. Which is right?

Also, this unit has a brand new carb and it seems to be giving too much fuel. The plug is wet and it wants to idle high to the point it's hard to get it in gear. What adjustments need to be made?

 

85 psi sounds low to me but i don't have a manual so i can't say for certain.
If the carb is a Chinese clone it should adjust the same as the original. Fallow the manual procedure. If not then it might be the wrong replacement carb and they are also known to be bad out of the box about half the time.
To much fuel can also wash the cylinder walls causing a low compression reading. I would try to fix the carb problem first then work on the other problem.

 

85psi was not a correct reading. The carb was still on and I didnt have the throttle plate open. Once I had the carb off I did it again and it jumped up to 120 which is on the low end of the- +/-15% spec. The oil was full of gas from being flooded out so bad and all that gas probably did wash the cylinders down. I put the stock carb back on after cleaning it, adjusted the valves, fixed a questionable plug wire, replaced a leaking O-ring on the fuel inlet seat, and it popped right off and ran perfect. Drove it around a little bit and then redid compression and it was at 155 - right in the middle of the spec.

Moral of the story, the 140-160psi spec is in fact correct for this machine. Also, most (all?) of the carb rebuild kits out there are coming with 145 main jets and a different needle, but no new needle seat. This is NOT the correct main jet. The stock jet is a 120 and using that 145 will cause it to flood out.

 

Gratz on figuring it out and reporting back as it will help someone in the future im sure!