Yep, melted that sucker right down and separated its components. The pitting in th eother cylinder is likely the FOD from the melted one, looks like that piston with the cylinder pitting got pretty warm to and the rings touched. Definitely jammed the ring son the melted piston then finished it off. Injector went bad and over fueled it way too much for too long with the carbon build up. Had some running time with a bad injector to build that much carbon.
I have been through this on a 2005 and 2006 and neither one needed sleeves. I would not use a shop that says you likely need a sleeve by looking at a picture.Does it look like there is that much damage to require a sleeve?
Not sure about the gapless second ring, they have their own issues on high compression engines but there are a lot of factors that go into gapless ring performance. Definitely will help with blow by, especially if the compression ring gap is widened to a safer zone. Life expectancy is probably more what you are worried about and that is a big question mark on gapless rings. The standard ring sets work so well if gapped correctly it is hard to move to something unproven.
No real problem with a sleeve in an ISB, they are not wet sleeves. Literally millions of engines rebuilt with sleeves and unless you are pushing the limits doubtful you will have issues, would not let that get in the way of choices. Will have to measure and see if it will clean to .040 over, even then you have lost cylinder wall thickness and that may not be ass attractive as a sleeve.
Why would they sleeve it and go .040 over when they can just put a .020 over OEM piston in it?
Basic design of the 5.9 block form 2003 to 2007 should be the same with the caveat the black has provisions for j-jets. Early SO 5.9's were still using saddle jets and not positive all those blocks were drilled for j-jets, that would be the only thing that *could* be different. Heads were different part #'s due the valve and valve seat changes.
There is little to no concrete info on using gapless rings in a non-performance application. Even reading Total Seals literature it is all high performance engines they are targeting. Since we all know high performance means it gets pulled down and refreshed 1 to n times per year that brings into question reliability variable. In an FI engine the burning question is the life expectancy, just not real info on it. Too many disparate experiences to say good or bad. For say a blown TA engine controlling blowby and fuel dilution it may be applicable, for a DD diesel engine is it necessary or advisable? If they are so great at blow by and fuel dilution control why are they not used by OE?
Does DPC say WHY they use them? What they are trying to address? If they are opening the top ring clearance for longevity and trying to control blowby that is one scenario.
Also begs the question what they are setting top ring clearance at with all the changes you are doing. OE specs are on the tight side with rings having a nasty side effect of touching with too much heat in the cylinder. Broken rings on these emission CR engines are rather high occurrence for that very reason.