Unfortunately, what one should disclose ethicly and what one should disclose legally are two different things. I'm assuming you were at the sea trials and the engine ran fine? Were there other surveys and sea trials from potential buyers before you? If so, the broker and surveyor cumminity in Annapolis is a tight knit community and previous engine problems would probably have been know by your broker and surveyor. All that leads me to believe there were no prior problems and the seller in all probability did not know. Sad story but another good example of why you should have separate engine and rigging surveys.