Camshaft has been damaged, lifters also worn badly due to the lack of lubrication from rocker assembly mistake.
You mean they rebuilt the engine after you had brought it to them for what has to be the second failure, as the initial failure was the one that started this whole store at posting #1, and they rebuilt it and did not correct the problem with the "claimed to be rocker problem". If that is what you are saying then any problem that cam about from this far fetched story is on them. They know the engine had been messed with by an untrained person. They should have made 110% sure every part they touched was correct for the application.
I know you are not a mechanic but the story seems to change every time something is posted about this engine. Until someone can prove to me that this story about a mismatch between the rocker assembly could cause the oil pressure to be so low as to cause a major failure in only an hour and half or so of running I'm sticking with the BS claim on that one.
Did they even check the oil pressure while they had it running to do this claimed stall test? If the pressure was indeed below spec's they should have noticed that in the first few seconds of running it and immediately shut it down to find the problem!
Just in case this dealer doesn't know how to check oil pressure here is the chart off SIS:
Note that this are MINIMUM PERMISSIBLE PRESSURES! I would personally start to panic if, after warming up even slightly, on an engine I had worked on the oil pressure at anything over 1,000 RPM that was less than 60 PSI!
I would ask them for the test run sheet on the engine that shows the oil pressure, temperature, RPMs, and if they were serious the Boost Pressure and RPM at convert stall, hydraulic stall and then full stall. If they can't or won't give you that information be sure your lawyer makes full mention of that when he talks to the judge. If they did not make note of those things they are in my mind guilty of malpractice.
It would be like a doctor doing a heart transplant and not checking you blood pressure or pulse!
And if they come out with the story "The gauges on the dash read good" get that in writing because they had no way of knowing if they were accurate with out comparing the readings to a known good gauge.