[Dave at Pelican Parts]

For the filter to get that bad, there is a pretty reasonable chance that Very Bad Things have happened to that motor. The oil light may not be lying... You can try swapping in a mechanical pressure gauge in place of the sender to double-check the oil pressure readings. If they remain low, then your main bearings and oil pump are suspect.

Which, in that case, would point to a need to rebuild the engine. At the least some of the bottom end of the motor would need to be inspected.

--DD