I presume you mean water as in rain water and not water as in Antifreeze?? neither are good for an engine but the later is better than the 1st.
if rain water we (others commented) presume that the exhaust was uncovered and the rain got in that way? if so you'll definatly have to pull the engine apart.
the Case 730 i had was that situation, uncovered for years and rain in #2 and #3 cylinders. I had to drill and chisel the pistons out and they didn't break loose until i got down below the pin into the piston skirts they were stuck so bad. for my situation it was less $ to part out the tractor i had and buy another running model for about what i would have had in the rebuild.
my FIL and i were able to unstick a tractor engine once by bumping it with the starter and it eventually came loose but it did not have water in the oil
so with a bad MFWD and a bad engine you may want to look for another tractor????? how is the rest of it? 16 years sitting out isn't kind to them. dry rot tires? faded/rusty paint?? mice in cab? ect ect
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