2006 Chrysler 300 water in the engine

Engine Mechanical problem
2006 Chrysler 300 6 cyl

I recently inspected my 300c which I was told had a crack in the engine due to water getting inside. On close inspection after taking of the cylinder head and removing the piston there was a scratch on the surface of the cylinder. The mechanic claims this is a crack and even though i rubbed my finger on the inside i felt no crack what so ever. He now claims the crack itself can be seen more clearly from the outside but is still unable to show evidence of this crack from the outside. There is no other damage what so ever just this scratch on the inside of the piston cylinder. He insists that the damage was caused by compression and the reason there was no other damage is because the small engine block is the weakest part of the engine including the piston rod. He says this scratch (crack) is causing fluid to leak out.

I have 3 questions (1) Can the water cause this scratch even though it is not abrasive, and secondly if it could not what could have caused it. (2) Is it possible for this scratch to be a crack viewing it from the outside. (3) Is the small engine block t6he weakest part of the engine.

I enclose a picture of the damage you will see a light spot on the right inside of the cylinder that is allegedly the crack which is seeping fluid.