Is it raw water cooled ? If so and they bored it oversize there is a chance they got into a bad spot in a cylinder ? I hope I am wrong but I have only seen a couple of 23 year old engines with that many hours on them and both of them were beyond repairing because of the corrosion in the water jackets. I know it was running "fine" before you pulled it but half of the gaskets were probably sealing on rust. Once it was taken apart and everything cleaned, all bets are off.

They need to pressure test the cooling system and see if water is getting into the cylinders. Could also be the underside of the intake at the water crossover but I think that engine has the brass insert in the manifold ?

Exhaust guides don't usually get water in the oil.

Just thinking out loud

I went thru this 2 years ago, with about 800 hours on my engines I got water in the oil, I had a very reputable engine builder totally rebuilt the engine and heads,,assembled and ran on the dyno,, again same water in the oil,,while on the dyno with water pressure on the engine,, we found a very small crack in the valley of the block behind #7 cyl.,, never would have suspected this.

Head gaskets. Make sure they are the right marine grade head gaskets.

It is raw water cooled, and yes it was overbored.

It was the risers...