Now, I know compression should be done on a warm motor on a fully operational bike (carbs on, exhaust on, fuel hooked up) with choke on and throttle twisted wide open and all spark plugs out.
Actually the choke should be OFF for the compression test.
So what differences will having the exhaust and intake ports on the engine open to air have?
It should breathe just about the best is ever will during a compression test.
Also, I know I'm not compressing a fuel/air mixture...so what (density?) effect will that have?
Liquids aren't compressible, gasses are. Suspended fuel, oil, or water vapor would theoretically increase pressures.
I measured the cold compression back when I bought it a year ago, but it had carbs and exhaust on it then, though no gas tank. These numbers (if I did everything correctly) read significantly higher than when I recently measured cold compression again as described on the 'naked' motor. I've been fogging (oil) the motor (cylinders and valve compartment) and kicking it over every so often over the last year.....so there may be a fair pool of oil in the cylinders reducing the volume of air available to be compressed?
Oil in the cylinders displace gasses and help seal piston ring to cylinder fit. This should increase readings over "Dry" test results.
Also, what effect if any does using an screw-on extension on the pressure guage have? I measured the compression on my CB350 twin, with and without an extension on the guage, and was amazed to see that with the extension on the compression read down by 20-30 psi.....again, this was on a cold motor. Why would that be?
Gauge tube extensions increase the total volume of air being compressed, lower the compression ratio, and generally reduce readings taken during compression tests. The effect is more pronounced with small cylinder volumes due to the ratio of added chamber volume. You have to compress the air in the tube as well as the chamber to effect the guage.
The fogging proceedure you describe ought to work very well to preserve the engine. (Although details on the conveyance of the fog might prove interesting.) However, older engines usually have carbon deposits in the chamber areas. These are pretty hard chunks and when they break off during run time, are ejected out the exhaust port. It may be that the oil has dislodged some of these carbon bits and the lack of a voilent event (combustion) to eject them, has them instead interfering with valve closure and or piston ring seal.
Unfortunately, rust can have the same effect on stored engines.
The other horror senario it that the cam or cam followers have rusted, and the frequent kickovers have removed metal and reduced the valves opening height and duration. I have no actual experience with the magnitude of this effect, though.
Lastly, be sure you are comparing test numbers using the same test equipment and setup. Otherwise, test equipment and measurement errors can mislead your diagnosis.
Cheers,