Weill, we pulled the engine yesterday, it went pretty well, only hang up was we forgot to disconnect the fuel line to the fuel filter and didn't catch i until it had already started to tear.
Once we get it broken down I'll let you know what we find.
interesting initial finding. When I cracked the oil sump drain, I got about a cup of water out before the oil started. The engine hadn't been open, since I last ran it, or had water in the cooling system until the day before( when it was run briefly. Water leak from the pump or head maybe.... would explain the spun bearing in the lower end.