Doing a compression check on a 1998 XK8. Is 125psi the norm?

 

That's low! I would wish for more like 155-160 psi. Do you have the throttle plate open? How many miles on the engine? What lead you to do a compression test?

Your model year engine was subject to chronic fuel cylinder wash with short, cold starts that can be treated by a bit of oil in each cylinder. That should also significantly improve the readings.

Probably time for a leak down test to determine if the problem is rings or valves.