water inside engine

[chompy84]

Hi,
Im new to boat engines, I have a 2001 mercruiser 350 MPI and I just put it in the water, ran for about 15 minutes at idle and then the long beep came on, turn it off and notice that temp gauge was on red zone did not start again, removed plugs and find water pouring out, remove heads and there is water on top of cylinders as well.
last year ran without a problem, this year I started the engine twice at home with a water hose, to change oil (drained only a quarter of oil) and to check and did not overheated.
any ideas on what could happen?
do I Need a new engine? if yes where to buy it (new or rebuilt)
thanks

[mmwjr]

Well it’s going to be hard to tell now that you all ready removed the heads. Did you first run a compression test to see if the head gasket blew? What cylinders have water in them. My first thought is the exhaust manifolds and elbows may be shot and allowed the water to be sucked into the engine by back pressure. Can you post some pictures?