I would take pics and document everything. Keep the oil filter that was used. If your inclined to get some compensation you will want all the information that you can get. May want to talk to the first shop that built it and let then know your intentions. May be able to get some kind of settlement without court cost.
Why were the bearing shot and the cylinders scored? Can I assume something didn't get cleaned? I just can't possibly see how you could not know there was a tube of RTV in the oil pan.
Glad you have one of the good names in the industry going through it now.
