Well, after looking at the pistons and valve surfaces I did not see any visible damage from turning over the engine without the cam chain tensioner installed (valves did not seem bent).  I put the engine back together with all new gaskets and o-rings.  Then I did a compression test.  The right cylinder only got up to 30 psi and the left cylinder maybe reached 10.  

I performed the compression test the same way I did for my wife's bike the day before.  Hers got up to 120 psi in each cylinder which is still a little low but the bike fired right up today.  Too bad I couldn't take it for ride because it is still missing many other parts.  But at least now I know the engine runs.  Sounded really good with that yoshi exhaust.

Well, I guess the next step is to actually take the valves out and inspect them and put new rings on the pistons just to make sure the rings aren't bad.  Is there a way to make sure the rings aren't bad before I replace them?  Any other suggestions on what may be wrong?

I'd bet it is bent valves.

You can check them somewhat without taking the engine apart. Pull the exaust and carbs, and put some gasoline in the exhaust and intake ports that have closed valves. You can see the tops of the vlaves. If it leaks through, the valves are bent. Rotate the engine to close the other valves to check them.

You can also check by shining a bright, small flashlight in the spark plug hole, and looking for light around the intake and exhaust valves. Works best in the dark.

Or if you pull the head, just inver it,and put gasoline in the combustion chambers. If it leaks, the valves are bent.

Did the light trick muself on gino's bike... great trick...but make  sure your garage is dark, Can also be used in a good motor to see if valves opening right. I have this tiny Led based flash light. Tiny and powerful.
Cool.
Srinath.

Yep...light through both exhaust valves.  The intake valves seem ok.  Anyone know where I can get a valve spring compressor that will work on the 500's heads?  I got one at Sears today but it won't work on the 500.  Guess I'll always be ready if my car needs a valve job.

Saw a modified C-Clamp that was made to do GSXR (oil/air) GSXR's... But you can probalbly make one for the GS as well.
Cool.
Srinath.

I haven't done this myself and with the amount of leakage you are getting it may not work for you but ... If you put a table spoon of oil through the spark plug hole, it should seal up the piston rings temporarily.  If your compression improves, you know it was the piston rings leaking.  If it doesn't improve, it's your valves.

Rob