So I took everything apart, lower unit is fine. Drained oil and very small amount of water (tablespoon at most, entirely separate from the oil which looked okay) drained out. Pulled the head and it's obvious the combustion chamber had water in it which had frozen the rings to the cylinder walls but I can't tell if this was the catastrophic failure. Block, head and head gasket look good. My theory is that the motor sucked in water and seized at low rpm (the guy was trolling or holding steady in what was likely ocean swells on the outside of a jetty) so it likely didn't break anything. I did have to take the rod end caps off and tap on the connecting rods to get the pistons out so I could pull the crank out. At this point, the main damage would appear to be the rings, possibly the cylinder walls (but they feel pretty good actually) and the connecting rods from tapping on them.
Any other theories as to how water would have entered the combustion chamber? Can this motor suck water in without a complete submerge (i.e. a wave spills over the top or it takes a quick dunk due to a swell coming into the transom. I'm thinking that if this happened the water eventually evaporated out of the chamber but some would have leaked past the pistons into the crank case.
I did a repair on a similar situation, 90 HP Force that had the cylinder cover gasket leak (bought it frozen from corrosion). I replaced the gasket, tapped the pistons out, used steel wool to clean the rings and walls and it ran "good" (for a Force, anyway). Used it until the lower unit crapped out.
Thanks,
BB