Damn, the torque converter hub is broken off.. How did that happen?
The piston is classic (tait rakhna zara bhai - hinjin beck na maaray) dumbass machinist work. The sleeves had hot spots (most probably helped with epoxy) and they set the piston/cylinder clearance completely out of whack, a turbodiesel needs to be slightly "loose" and that is why you follow the book which is called "toyota service manual" - not "hamara andaaza zindabad" - I also see "helper rings" insatlled on the oil ring lands which is major bad news.
the bearing shells faced loss of oil pressure - in my remote view (because im sitting behind a computer screen) is because the bedplate was tightened with RTV slathered on it rather than anearobic sealant. RTV has too much body and can lift the bedplate, - But god damn, I have never seen a torque converter hub snapped off.
The valve touching the piston is because the engine lost time (timing out)