You got extremely lucky the seals didn't shrivel and leak. lol
How else would you observe them while running it, if he was not in fact meaning external? Lol.Could be an oil one too, it'd be hard to see with water squirting all over.
FWIW don't worry about the compression at this point. The compression will almost certainly come up and level out after it has run a while. I have probably brought a hundred vehicles back to life after they were abandoned by someone else and they "need to get used to runnin" again" as the old guys used to say.