Take a look here; you see that ridge at the top being about .25 inch or more high and bronze colored. That, by itself, is not a problem. It appears that someone ran a glaze-buster thru the cylinder. That also by itself is not a problem,even tho it was poorly done.
But look at the untouched area just below the ridge and just above the scratchy area. That's a problem.
Recall that this is the space where your engine is supposed to have compressed the mixture to the max, and the ignition system has lit it off. The pressure is building and the piston is dwelling there as it changes directions. That pressure is desperate to escape, and sees that as an escape route. The top ring has expanded into there, and the gap has opened up. So, whoosh the pressure heads for the crankcase, and it's on fire.
I haven't seen the pistons but I bet the sides show the evidence of the burned oil, proving this is what is happening. Supporting evidence would be black oil.
The bottom line is that engine need to be bored, and new rings/pistons installed. That will simultaneously get rid of the ridges, the watermarks, and she'll get a proper crosshatch for oil-retention.
Since you now know this, whatever shop you take it to, might, for a few bucks, put the entire short block together for you. Then when you get it back, you get to take it apart and check their work.
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