[wesso]

Jan there are people in this forum who are a lot more qualified to help you with this than I am. However, until somebody else steps up to help you I will help as much as I can.

That is a good sign if the oil is clean, but I don't think you can completely rule out the possibility of a blown head gasket. Lets get back to the timing belt issue...

Yes it is possible to sheer a key off, but to do that there would have to be another pretty big problem somewhere to cause this to happen.
Again as I said yesterday... I am not familiar with your engine so I am only making guesses. I know that chain driven cams have a key on the bottom sprocket and the top sprocket, so if the belt has a similar setup there should probably be a key at both the top and the bottom pulleys and to check if the key has sheered off you should only need to remove the bolt in the center of the pully that holds it on the shaft and you may be ablt to see from there if the key way in the pulley and the shaft is in alignment.
Be very careful not to disturb the location of the pulley on the shaft though. If the key is still ok and aligned you don't want the pulley to be coming off unless you have the correct information for setting up the timing again.
I'm actually thinking now that it may be more likely that the belt has jumped a couple of teeth rather than sheered a key off. At the same time I would be trying to find out what may have caused that to happen if that is the case. Because if you reset the timing belt and the pulleys to where they should be, there is nothing stopping the same problem from happening again if you know what I mean.
I'm really sorry that not much of this is good news for you, but I will say that at least you are willing to have a go at repairing this problem and that's pretty gutsy in my books.
Ok I just had another thought... it may be another wild goose chase, but it could be worth a look anyway. Was there or is there any oil in the coolant that is left?

On another note... Have you had the tappet cover off at all? if you take the tappet cover off and turn the engine over by hand and check that each valve actually opens and closes in the prescribed firing order. Having an overhead cam may mean that this is going to be a bit more difficult to see especially if the valves run directly off the cam and not off rockers (AKA tappets). If your engine has rockers then you should be able to see that the valve stem is returning to the fully closed position after it has been opened thus making the rocker arm relatively tight except for a very slight gap. If you find that a valve is not completely closing then I would suggest that the valve stem is bent and that will definitely cause little or no compression because the port is open all the time.
This would also confirm that the timing belt has moved from it's correct position.

I'll leave it at that for now and see what your findings are from that.

Cheers
Wayne