1996 Ford Contour • 15,200 miles

Car starts just fine, good fuel pressure 36.5 psi at idle, did commpression test #1 -160, #2 --125 #3-120 #4-155, engine starts to surge at idle after the thermostat opens, small drip from tail pipe 1 every 2-3 minutes. No oil in coolant or no milky oil or valve cover cap, notice a few bubbles in coolant tank and the upper hose gets really hard have replaced the the coolant tank cap, is it a head gasket?
March 16, 2013.

It is normal for the radiator hose to get hard. As far as the compression, the rule of thumb is that you don't want more than a 10% difference between cylinders. You, have exceeded that. As far as a head gasket it is possible. It could be a valve leaking, worn rings.

Before you tear into the engine, check simple things. Check for vacuum leaks. Check the idle air control valve. Is there oil mixing with the coolant?