Can the harmonic balance come loose?

The engine I had was eaten by the balancer because as the outer ring loosened it moved in and hit the timing cover. That effectively pulled the crank forward and it ate the rear flange off the thrust bearing, and when it hit the steel baking of the bearing shell it ate the crank's thrust surface. What you have there is the same affect. So - my money's on the bearing is gone, the metal went all through it, the crank flange may or may not be trashed, and it's time to think about a rebuild or replacement. Sorry - that cheap balancer cost me $2800 out of pocket to make it right for my customer. Live and learn.