Man sorry to hear that. I'd bet money that the cylinder has a piston with cracked ring lands.
Not much you can do but get a new block.

If the car is really clean, you can easily drop in a 3L oval using stock svt cams and intake and it will become a really nice car worth quite a bit more.

Otherwise, people are looking for all kinds of builder SVT's right now. Find out what the going rates are for both.

Suing someone is always difficult. Document everything with your pictures and then determine if the person has any money or physical property that you can attach if you are awarded a judgement.
Normally I'd say you are screwed if it was sold as-is, but if they said it runs good and sold it as is, then you have visual proof then engine doesn't run good. That plug is showing quite a few miles on it with it fouling out, it didn't just happen so it is pretty solid proof that the problem was preexisting.
As far as the turbo pipes, you may just end up rebuilding them and fabricating some better sections.

Former owner of '99 CSVT - Silver #222/2760 356/334 wHP/TQ at 10psi on pump gas! See My Mods '05 Volvo S40 Turbo 5 AWD with 6spd, Passion Red '06 Mazda5 Touring, 5spd,MTX, Black