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Yes, that would be the lip that fits in the notch at the top of bore that seats the liner If I was to pull the liner, I would look really CLOSE for cracks in the block right at the hit area, especially where the liner lip sits

Look right at the hit, then the crack and another crack at 3 o-clock, think though may be wrong that the liner is tweeked by the solid hit, because at 6 o-clock the liner is flush with the block inside the gasket, at 12 0-clock at the hit, it looks like edge of block then gasket, plus the soot...

Looks like something GOT into #3, DROVE the liner down, beat the piston edge up, liner looks cracked about a inch to the right of the hit, bet getting that liner OUT will be fun, if you found nothing in #3, check the exhaust valve and seat real good, as well as look for cracks at the same spot...