There have been several references to a compression test i.e. measuring compression with a pressure gauge when cranking. I also think a leak-down test can be useful, that is to say filling the cylinders with compressed air and listening to hear where it comes out. This could show leaky valves or piston rings (probably not relevant here) but one might also expect any air leakage into the cooling passages to show up.

A very good point , a leakage test can spot a lot more than a compression test , In fact that is VOLVO UK's only approved method now , compression tests are out ..