Your giant stack of LiPos is going to cause quite a bit of interference with the GPS. Do you have the rest of the GPS "hood"? It might help to raise it up a bit, too. Remember, it needs to "see" the sky, and where you have it, quite a bit of the sky is going to be blocked. The GPS are also extremely susceptible to static electricity, and can easily be destroyed by touching the antenna. I know. It happened to me. And it's happened to many others, too. And the GPS will not indicate a failure...it'll just report 0 satellites forever. Not sure that'd affect the compass, per se, but if you have an extra MKGPS it might be worth a try. BTW, if you disconnect the Navi board altogether, does the copter fly? It should fly in manual mode just fine.