to my knowledge oil is lighter than water, forcing water to sink. which is why if you get water in your oil in your automobile it gets picked up bt the pump first being the pick up tube is at the bottom of the oil pan in turn causing bearing failure.

also oils or hydraulic fluind in tighter tolerances can create it's own seal.
i would think this is the case with your engine.
being the bearings are behind the crankshaft, i think the moisture got sealed in.
is after run oil supposed to displace moisture? i know WD-40 does but i don't think ARO does.

displacing moisture and displacing straight water are very different.
for displacing water i would've emptied as much water as possible and then filled it with dry gas and let it sit a while. then empty the drygas and use WD-40 to clean it out and then use ARO to treat it.

of course the best way for a water drowned engine is disassembly.