Gents,
Ok I just want to put a close on this thread and explain what happened, what we did and what we learned. By we I mean myself and my son who did most (like 99%) of the work on the car. So here we go.
What happened.
I was with the wife in Europe. Son usually drives the cars I have and he was out with the Boxster. Driving home he gets an engine light. Stops at home and scans the car. Misfire on cylinder 5.
He goes through the normal troubleshooting procedures. Swaps coils, check spark plugs, etc. Issue is always with Cylinder 5. Camera goes in and everyone around things there is a crack of some sort on the cylinder wall. So it does need to be opened up to see what the hell is going on. No compression of course on Cylinder 5.
What we decided to do.
As I do have several other cars the Boxster was not really needed so we did not care about how long it would take to get it back on the road. As we want to learn more about vehicles in general (well my case; he knows a LOT more) I tell him we will rebuild it at home. As I do not have all the required tools/lift one of my friends, a Porsche trained mechanic (he even took Raby's class in the US!) takes the engine/transmission out for us at his shop and I bring it all home. Tearing down the engine starts. Keep in mind this is the first Porsche ever we do that. I told my son, this is made in Germany not made by Aliens so if they can fix it, so CAN WE.
Some stuff We bought along the way.
To make things easier I bought an engine crane, an engine stand, the whole Porsche 986/996 timing tools, a dremmel and some other minor things. Did not keep track of how much I spent on tools as if there was a record and my wife found it I would not be here today typing this.
What actually happened?
So here is the deal. First of all tearing down this engine is NOT hard at all to be honest. With the GREAT guides and videos available on YouTube, PelicanParts and on the Internet in general, if you TAKE YOUR TIME and have patience, anyone can do this. Even though my son did most of the work, one thing teenagers lack is patience and that is where I had to step in a couple times (i.e. when taking the head bolts off). Again if you are not in a hurry and want to learn along the way anyone can do it. I am 100% convinced after going through all this.
Once we got to the cylinders this is what I saw, after looking for a potential issue (the things we thought were cracks in the wall were nothing but scuff marks, normal after 56,000 miles on any car, just part of regular wear), attached.
Some metal piece made its way to the combustion chamber and got stuck between an intake and exhaust valve. So the valves were never fully closed what of course led to no compression on that one cylinder. Once we took it out the valves closed perfectly as expected. We poured steering fluid on top to see if it would leak and nothing. Perfect seal.
What we did then.
Well as the whole damn engine was already apart I told my son, let's do whatever we can now so we do not have to touch the internals on this for another 100,000 miles. So we got new IMS bearing, new piston rings, new water pump, thermostat, the obvious needed stuff (seals, bolts, etc), new clutch I had sitting around, etc. I am probably missing some stuff but I will check with my son and update this thread one more time trying to get a full list of parts.
We then sent the block/heads to a company to get them fully cleaned, remachined, checked, etc. They were the ones that then put everything back together for us and did the timing. We did that just for convenience and not because we thought we could not do it and I must say here it was a mistake. And I will explain why later.
Then
Finally once we got all back it was time to go to my buddy's shop to put it all back in the car and try the damn thing!
Once it was all there we tried to fire it up. Puffing, smoking, and.... NADA.
Time to troubleshoot what the hell was going on.
Timing was checked and seemed correct. All electrical fine. So where the hell was the problem? My buddy, being very experienced with these cars, starts troubleshooting it and finds the cylinders on one side (1-3) where on the same stroke as the ones on the other side (4-6) so the engine was fighting against itself.

The morons that put it together messed up. Once my buddy rotated the cam 180 degrees (and checked everything else like how many chain links, etc), he put all back together (by the way no need to take the engine down again for this) and it fired up on the first try! So the little Boxster S lived for another day!
What have we learned along the way?
The first obvious thing is, it is possible for anyone to rebuild such an engine at home these days given the amount of information out there, the amount of people willing to help (like all of you, the guys at the Pelican Parts forums, etc). It is all a matter of taking your time and going through all the material available. And of course getting the proper tools.
What I would have done differently was to put all back together at home and not relying on the company that re-machined the block/heads/etc for us. Just to learn even more about these engines.
The other interesting thing was seeing the IMS after 56,000 miles. I have it on my desk and it looks new. No signs whatsoever of wear. But as I said we replaced it. And I am doing it as part of a clutch job every single time from now on. An extra $600 in parts is nothing compared to the peace of mind you will get out of it.
Resuming: took us a year pretty much to get this sorted out/done and we learned a lot along the way. Definitely something that is doable by all of us. Huge thanks goes to all of you that post on a daily basis all the DIY stuff that allows people like me, with no previous mechanical knowledge to learn more every day and to be able to tackle something on my cars when they need work.
Cheers guys! Appreciated.
CR