Did the engine ever suffer a prop strike? Sure sounds like it did with the crank bearing play and the gouged piston. Probably broke the needle bearing cage and the first place the debris goes is up the side of the piston. Send the engine to DLUSA for repairs and pay the price, or get a new one from DLUSA. Also check those needle settings. You've been running on the hot side.

If the cylinder is clean that part of the engine is good to go but the rest of it needs a bit of work.