Without seeing & hearing it myself, I can only guess as to what the problem is. Your stepfather’s desciption is the next best thing for us to use to make a GUESS as to what the problem is.
Since the engine is a diesel, that eliminates any ignition problems. It can almost only be a fuel delivery problem, or a valve train issue. I have seen some really weird stuff in my many years working on engines, so I am aware that anything is possible.
Since your stepfather was able to successfully bleed the fuel system, finding no air, it is likely just fine.
My GUESS is, It sounds like one of the bronze exhaust valve guides may have seized on the valve. It then moved up & down with the valve. This probably wollowed out the block it was press fit into. Which may have caused the guide to beat itself into pieces, creating the “brass” chips & chunks. This would cause both the hammerd look, as well as the scraped look that your stepfather observed. Note" bronze and brass look very similar when they are dirty & oily.
The engine running for 30 minutes or so & then stopping, yet being able to restart it after it cools off, is typical of a seizing valve guide. The engine gets warm & the valve guide seized to the valve, causing the engine to miss & then to quit. When it cools off, the valve is free to move & the engine will run again, until it gets warm again.
If not fixed, this often results in a bent valve, or a broken valve guide, or a broken valve, or a severly worn camshft & its followers (lifters), or any combination of the above. If the valve itself breaks, the peice that is broken off often will knock a large hole in the piston. Any of the above is bad.
The rod loose on the crankshaft is a deal breaker. The engine needs to come out & needs rebuilt or replaced. Which one will depend on how much damage was done to the crankshaft & the block. Some folks will try to rebuild the engine in the tractor. That may be possible, but IME, it is not worth the major hassle it becomes. In any case, you would need to pull the engine to fix the clutch problems.
If the rod bearing failed it will knock loudly. If the engine is run with a failed (knocking) rod bearing, it often will litterally beat the crankshaft to death. The crankshaft may not be able to be saved. If this is the case, it usually means that a new engine is in order.
If I am correct on this guess, the block will have to be machined to take an oversized valve guide. I am not familiar enough with Yanmar engines to know if there is enough material (metal) in the valve guide area to be able to oversize the valve guide hole enough to effect this kind of repair. If not, a new engine is needed.
If a new engine is not cost effective, you MAY be able to source a good used one from a tractor wrecking yard.
In any case, the repair will be fairly expensive. Have a tractor mechanic that is familiar with Yanmars have a look at it. After all, I may be wrong & it will be a cheaper fix than I think it will be. I hope so!
IHTH, 48.
PS, I agree with stepfather, the clutch problem is a seperate issue. Fix it while the engine is out.
