I think you're jumping the gun with an engine diagram. First, determine what's is obvious as being wrong and go from there. Once you see damage, then you'll figure wither you want to tear the whole engine apart, or not.
Remove the spark plug, try rocking the flywheel back and forth and watch the whole PTO clutch to see if only the top is rocking, or top, bottom and deck belt. If everything is rocking, the clutch may be frozen. Unplug the clutch cable and remove the anti-rotation bracket, or pin. If you can rotate it now, going slow, then you should remove the clutch and the upper pulleys. At his point you could install the plug and try with the starter. Maybe even starting.
If the clutch is not frozen, remove the valve cover and inspect the push rods for being in place and check the looseness of the rockers. You may have a rod out and\or bent. If all this looks good, you should remove the head, but you won't see much. At this point, it's probable internal, like a broken piston push rod or even more.
Now is when you will decide wither to continue, or not. If you continue, you'll need to have the parts breakdown and figure out what's needed and it's price. If may be more feasible to find a replacement used motor. That engine type is readily found for a descent price.