So I can finally walk again and got to tear into the motor. (ankle surgery on Dec 31)
Today we pulled off the AC, Alternator, water pump and the timing chain cover. The motor is basically down to block, head, lower IM and header. We also got all of the motor unbolted from the transmission and it is ready to pull.
Some what like I expected based on what we found late December, the gear was broken.
How it is supposed to be:
Part that shouldn't be alone:

What we didn't realize at first is that the "unubtanium bushing", was on the the gear splines. It came of the gear with little fuss and slides right in and out of the block. Also, we notice damage to the rim on the inside of the timing chain cover that the oil pump gear rides against. (more and better pics tomorrow)
Failure theory A:
1) Junk in the oil got into the bushing and caused higher friction and/or seizing to the oil pump gear. (at operating temps)
2) Bushing spins, closing the oil passage, causing complete seizing of the bushing & gear.
3) Gear snaps
4) Gear damages timing chain cover
Failure theory B:
1) Damage occurs to timing chain cover (mystery)
2) Gear movement causes binding of gear/bushing/block
3) Bushing spins
4) Bushing/gear seize and Gear snaps
Either way, I'm pretty sure the block is toast. I'm assuming the block hole was reamed loose when the bushing spun. Additionally, turning over the crank, I'm getting quite a bit of piston blow-bye, so I assume the piston seals are gone. Otherwise, the head and crank bearings all look good. No scaring or galling.
