From What I can see, The crankshaft & bearings look fine. There is some wear on the bearings, but nothing abnormal. (Yeah, I missed the Diagnosis on this one)
From What I have seen, The piston top looks pretty typical for a Diesel piston, But wow that side view looks bad.
Does this engine Have piston cooling Nozzles? Do All/Any 12V's have them in?
Possible Failures : bad/Plugged piston cooling Nozzle(if Equipped), Or, By reading the original post, we see that the previous owner had a KDP problem that he had driven for a while. It is possible that It was ran with the oil level way to low. I suppose the other possibility would be that it just failed. Sometimes things like this happen. I Hope this answers some of your questions, P.