I had exactly the same problem - the engine was seized until I took the whole thing out, removed the cylinder heads and freed the cylinders up (again, the rear-most one was the worst) by pouring diesel oil into the bores and sump and leaving it to soak. I then turned the engine over by hand using the flywheel as a handle until it was spinning relatively freely.
In my case the reason for the corrosion was that the coachroof and the Lord only knows what else had been leaking, and over months and years of neglect, the water had built up to about 8" above the cabin sole. Since none of the seacocks had been shut, the resulting lowered floating level of the boat allowed seawater to back up the exhaust pipe, through the swan-neck and into the exhaust manifold. Here it must have found No.2 cylinder exhaust valve open and drained into the cylinder, gradually running past the compression and oil control rings to drain into the sump where it slowly displaced the oil.
Still, It's working now! lol
The thing about these old diesels is: Handled sympathetically, they're nearly impossible to kill. That's why I like slightly agricultural safety equipment!
I'd be surprised if you got water in the cylinder during lift-out - unless they used a travel hoist with a very steep incline and the stern of the boat was depressed a long way beneath the water. Do you have a swan-neck and a big anti-surge loop?