RE: Is this engine toast?
Is there any discoloration of the engine head?
This would be a BIG sign that the engine suffered serious over heating and has been damaged. If it doesn't show any signs - there are still no guarantees (there could be internal damage) but you have just eliminated one possibility.
Other questions - What sort of fuel did you use?
Was there lots of caster oil in it? (I hope so).
Is the engine gummed up with fuel residue? Have you flushed it out? Do you know how to flush out an engine?
Tuning? has anyone played with the settings? - Did they know what they were doing?
"The Devil is in the Details"