You can't actually check motorcycle "shocks" as you do on cars. Btw, on the front they're called "forks". Only the back is referred as shock
The only reason for a fork failure would be to have a worn/torn seal. And you can easily detect that by the oil you'll see on the inner tube after a compression-extension cycle. In your case you might need to pull up the protective boot to see the "cross section" between inner and outer tubes. Unless, the seal is so bad that all the oil is already gone, but in this case it should have been dripping from the boot!
Fork compression depends on a number of variables, and there is no specific rule of thumb on how much it should compress. It's more of a rider feel and preference. (Pure motocross bikes are an exception, and even there sag setting is "controversial" to say the least!)