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Wow. that's quite backwards. People usually stick a B20 head on an overbored B18 block, not the other way around... Weird. There's no advantage to using a B18 head (except that the water temp sensor port is closed) and a lot of disadvantages unless it has had some heavy machining.
Not sure about your valve issue, but I'd suspect a problem with that valve spring, the valve surface itself, odd valve recession/damage or something physically jamming the valve - preventing it from closing. Aside from something physically blocking the valve from closing, the valve spring is probably the cheapest/simplest to fix, but requires that you pull the head. You might have done so already.
A complete B20E is a high compression motor largely from using an extra-thin head gasket. They make a low compression kit with a thicker gasket that brings the 180 psi compression down to a more typical 140-150 that behaves better on our modern lower octane gas.
I have a B20E with plugged FI ports that is presently powered by a pair of dual SU carbs that I transplanted into my 1967 122S Wagon from a 1971 1800E. It's a great motor, but now that I think about it, I had an issue with 0 compression on my #4 cylinder that had no logical explanation...
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