My vote is to remove the piston & check the piston rings, piston skirt and cylinder wall on the right side where all the corrosion is located. I think you'll find there is a reason for the rings to be grabbing. I can't tell from the picture, but it appears the same corrosion is in the water passages at the top and bottom of the same side. Crack in the #1 cylinder wall? Time to tear it all down & evaluate what you have that is useable.
