On Friday while coming into a mooring my engine stopped abruptly. As we were drifting with no power I tried to re-start the engine and eventually it fired up but knocking. I immediately stopped the engine and luckily got moored up with help. The engine can be turned by hand but only so far when it goes solid. We have removed the cam chain cover expecting to find missing teeth or the belt jumped but nothing. The valves seem fine on inspection with the rocker covers removed but on removing the plugs water was evident in all 4 starboard cylinders, and on turning the engine the wrong was the water could be heard pouring from the plug holes. We have removed the starboard exhaust manifold and riser thinking it may be the cause of the water in all 4 cylinders but on testing with a hose in the inlet no water was evident in the exhaust ports. I am totally stumped! On the removal of the heads I expect damage but I still need to get to the bottom of why it happened so as to ensure it will not happen again. The engine is a Mercruiser 5.7 V8 Serial No OD501645 and any help or advice will be greatly appreciated.