Hi Jason,
I know it does'nt help you much, but I've been struggling with this, not on a lupo but a Polo with BBY for ages.Luckily its a long standing and understanding customer.
I've done the same as you (lots and lots of time!)but found the compression down v slightly on the offending cylinder.
Stripped it down to find slightly burnt valves .Complete top-end overhaul later and - you guessed it still the same!
Customer doesnt use it much and prepared to 'put up with it' for now.

Frustrated of Staines.

Colin.