When you say there's not enough compression is that from all cylinders? Normally if a head gasket has gone it will show up on two adjacent cylinders, ie 1&2, or 2&3 or 3&4.

This is showing that the head gasket has gone between two cylinders.

The white yogurt type of gunk in the oil is also indicative of a head gasket failure, although it could be that the engine has got a lot of internal wear(how many miles has it done).

Not sure how or why you have water around the spark plug though.
So yes carry out a compression test on each cylinder and if two adjacent cylinders are very low then your head gasket has gone.

If all cylinders are low then you should carry out a wet compression test on the cylinders, ie put a small amount of engine oil in the plug hole, leave for 1 minute then carry out the compression test. If the pressure rises then you may have worn cylinders/piston rings.

If you do repair the engine remember to change the engine oil and also the oil filter.