Yeah, that's the damage I expected. Engine was seized, and someone gorilla'd it. Neither the first, or the last.
I'm an unwilling XS400 expert, and you'll soon be one too. I would suggest a bottom half off ebay, or craigslist. I know there have been a bunch suggested.
If you have any question's don't hesitate to ask. I've been down the XS400 road, and I live 20 minutes away. Not to mention I changed a hot water heater at my dad's house off 183'rd, and 84'th ave yesterday.