Hi and thanks for using 2CarPros.
The flashing check engine light indicates a misfire is occurring at that time. It may or may not be related to cylinder three. Now, the catalytic converter may have been damaged as a result of the cylinder three compression issue. However, the converter didn't cause the low compression. When pressure is that low, either you have a bad head gasket, burnt valve or worn compression rings. The only way to be sure is to do what is called a wet compression test.
Here is a link that shows how a compression test is done and a couple more that may be of interest to you:
A wet test is this. First, compression is checked as discussed in the aforementioned link. In this case it is 60psi. Next, about a table spoon of motor oil is placed into the cylinder and then the test is done again. If there is a substantial increase in pressure, the compression rings are bad. If there is no change, then there is either a burnt valve or head gasket issue.
If there is no change, then you would need to check for a head gasket problem. Here is a link that shows how that is done:
Once that is done, if you find no evidence of a bad gasket or compression rings, then you have to suspect a problem with the valves.
None of the things I mentioned, head gasket, rings, valve, are cheap or easy fixes. The engine has a lot miles on it, so there is a chance of any of the things I mentioned.
I hope this helps. Let me know if you have other questions.
Sunday, January 20th, 2019 AT 8:17 PM