Good evening,
The fact that water got into the system, it may have got into the injector pump and the injectors. If any water got into the cylinders, it cannot be compressed and most like damaged the piston rings.
That would explain the blow by into the air filter. Compression is coming back into the intake system.
Yes, replacing the engine is the answer. It would be a total loss if you pulled it down and tried to rebuild.
Sorry, no easy fix on this one.
Roy
Thursday, April 2nd, 2020 AT 5:30 PM