Water in cylinders?
 

I recently bought a used 3500 with 120,000mi for my 99 Diamante. While hand turning the motor over to install a new belt and water pump the motor would only turn 3/4 of the way over. Looking down the spark plug holes we saw a brown liquid in cylinders 3 and 5. We shot a small bit of air into the cylinders to blow the stuff out onto a rag to check it out. Along with the liquid small pieces of what looks to be carbon also blew onto the rag. The liquid appears to be water. The yard I bought the motor from said the motor ran when pulled and sat for a few months on the shelf. They said it was condensation from setting and to pour tranny fluid into the two cylinders to clean them out. Does this sound plausible? The mechanic I am working with said it is also possible the motor was from a flood car, could this also be possible? Thanks for your help.

I would do a rebuild on that motor, condensation leads to rust, rust leads to damaged piston rings, reguardless of how the water got in there I would tear it apart... my suggestion

You can tell if it's only surface rust. Always leave the spark plugs in.

Remove the head, inspect the damage, and use some carb cleaner to get rid of the rust. Maybe even a light steel wool.

Thanks for the advice.
 

The cylinders were pitted pretty bad . I ended up returning the motor and installed a 2002 motor with only 70,000 mi. Replaced all seals and gaskets, put in a new timing belt and it runs great!!!

right decision