On the survey not catching this, this is a tough problem to find on 92's.
When the liner seals fail it'll either dump coolant into the combustion chamber or into the crankcase, or both, depending on where the leak is. If the former, it'll come up on an oil analysis. That is unless the seller is a skeezeball and changes the oil before your survey to hide the problem, in which case it likely won't catch it. If it's leaking into the cylinders, there really are no symptoms to speak of other than you will have to keep refilling the coolant every so often.
That's not something the engine surveyor who runs it for 30 minutes and then goes home is likely going to catch. Detroits are pretty tough, they'll still spin up with everything in the world wrong with them, they're their own worst enemy in that regard. If you keep running the engine like that, the leak keeps getting worse from the expansion cycles and eventually it gets to the point where it trashes the pistons and rings since obviously liquid isn't compressible.
But to your point, I agree 100% the former owner had to know about this. He must have been refilling the coolant on that engine for a long time knowing full well there wasn't any in the bilge. My guess is that's why he decided to sell the boat. For whatever it's worth, Bill seems to be taking this all in stride. He loves the boat so much that he's not as mad as I think I would be in that situation, although it will probably set in later. I have invited him to join the forum, and he says he's going to.
