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I'd just go ahead and pull the engine. You'll spend about as much or more time poking around trying to find the issue. If there is something binding up the flywheel, you'll have to pull it anyway to find it. If it has spun a bearing and the crank is seized (and I don't think it is based on the description of the oil), you'll have to pull it. Also a benefit to pulling the engine, it will allow you to clean it up and the engine bay a LOT easier.
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