Cylinder wall problems ( never seen anything like it)

I'm not familiar with these pistons, but it looks like the skirt has been made narrower than the bore, therefore the entire piston can potentially rock in the bore. That would definitely explain the dents and the grooves below the top.

Can you post two side photos of the piston (one from front side view and one from left to right side view)?

Did the engine make a lot of noise before you tore it down? Why did you tear down such a low mileage engine in the first place?