It is timed to fire somewhat before top dead center. If it stops rotating just about the time it fires, it will try awfully hard to start backwards, and it might manage to get back far enough for the valve to be opening a tiny amount if the decompressor is worn out but still lifting the exhaust valve just enough to make it leak into the muffler. You would then get a genuine backfire: an explosion in the muffler.
If you back it up a turn from compression, put the spark plug lead on, and hit the starter, does it start and then run normally? No funny noises and you can't fault its performance after starting?
If it runs properly when you do that, it is pretty clear that there is nothing wrong with the engine except that the decompressor isn't working. At that point, I think it will be necessary to remove and inspect the camshaft and tappets.
