'97 Trooper/Bighorn (Honda Horizon) — Valve marks on pisons, oil in intake...
 

Hi all

Note: Engine 4JG2 3.1 Longblock Turbo Diesel

This is my first post here. Over the past week or so my Dad and I have been diagnosing and in the process dismantling the engine of his '97 Horizon (they are called that here in NZ). Over the course of this process, we have found two things that worry me:

The first is a large amount (quite a lot, and its black) of oil in the intake, right up from the turbo to the intercooler and the intake manifold itself. Now I'm fairly sure that the oil seal on the turbo has failed, causing this... But I thought it best to post here and double check regardless. If anyone has any other suggestions I'd be glad to hear them!

The second issue is more severe, as all 4 pistons have what seem to be pretty substantial valve impact marks on them. I have attached two photos to illustrate this. Please note that they are both showing the same piston, but they all look exactly the same...

http://img860.imageshack.us/img860/9170/sany00022.jpg
By edenbrackstone at 2011-04-12

http://img863.imageshack.us/img863/6592/sany00012.jpg
By edenbrackstone at 2011-04-12

I guess the pictures say it all. And I'm hoping someone here can offer a suggestion as to what we need to do in order to fix this. A full piston replacement set is about $550 NZ, and we are happy to buy one if required. Valves on the other hand, I'm not sure... But I'm guessing they will be screwed.

We are fairly sure that this issue dates back to when our mechanic "fixed" the timing, causing the car to run like crap and overheat. We took it back to them, and they rationalized their approach by suggesting that the timing needed to run advanced for some reason. It was a while back, I cant remember the specifics... However it's clear this has caused some damage.
The reason for the repair is the car began to run very rough, smoke and finally stopped suddenly a week or so ago, and to be honest it hasn't been running well in quite a while.

So I guess this post boils down to this:

How bad is this damage?
What components should we be looking at replacing?
Is the turbo oil seal the likely culprit for the oil in the intake?

Thanks in advance to anyone who can help!