Sounds like a badly bent connecting rod? Perhaps water got into the combustion chamber either through the exhaust manifold or a large leak from the head gasket or a cracked block or head? You might want to get a detailed estimate from the mechanic before attempting to re-use the existing engine. Don't know if Yanmar offers "short blocks", just the block and internal moving parts, but you might explore that possibility. Also while the engine is out you might want to inspect or remove the fuel tank or anything else that is hard to get at with the engine in place.