Tell us more about the knock and metal flakes. Where is the knock coming from, cylnder or bottom end? Were the flakes steel or alum. If the knock is coming from the top end you may have a sticky, or bent valve from the cam chain being out of time.
If a piston skirt broke and it still runs,(unlikley) you MIGHT be able to replace it w/o spliting the cases. If the flakes were steel, and the knock is in the bottom end, major work is ahead.

https://m.youtube.com/watch?v=J8OoLDLEdi8&feature=youtu.be

Here’s the vid of my bike after the tensioner and clutch pack install in ‘18.
i feel pretty confident that it is coming from the top end and it sounds more like a rod knock than the ticking of the cam chain tensioner when listening to other vids for comparison. I found an engine nearby for a good price w low miles but my mgr(gathering master mechanic) told me pulling the cylinder wouldn’t be worth the trouble.
I don’t want to have to take out the clutch pack and tensioner on my crankcase though in the case that the one I buy hasn’t yet been replaced or isn’t in as good of condition.

It has been my experience, that a knocking Savage engine is pretty hard to find the source of the noise from the outside.  The darn thing just seems to radiate the noise from everywhere.

Have you even been up top to see what the cam and rockers look like?

Having water in the crankcase could have done a lot of damage....if the water was deep enough to have rusted the bearings.  If the piston was down around the bottom of the stroke, then that would have been the lowest bearing in the engine and that could be what is knocking.

It is my belief that almost any engine swap will likely require some engine work before you drop the new engine in.  The wiring is not a huge issue, as you just need to keep the left side engine cover and magneto of your current engine......if the rotor and stater of the new engine is not compatible.  Buy the best engine you can find....the year is not as important as is condition.  I am not sure about how you ride and it if makes any difference if you have a 4 or 5 speed gearbox.

Most engines I see for sale are from bikes that somebody has crashed or the bike has been abandoned.  The minimum work I would do on a replacement engine is to pull of the head cover and check the condition of the cam and tensioner, replace the stock(leaky) head plug with one from Verslagen.  Then before I install the head cap with Suzukibond sealer I would also check the condition of the cam chain and tensioner, and replace the cam chain if it is worn.

I support your decision to keep your bike - but if you want to ride it and not make it a continual maintenance project.......you really need to get an engine that is in good shape and maintain it regularly.  As I have mentioned above........the $600-$900 engines on eBay are in unknown condition, and almost any one of them will require some mechanical work before you can bolt it in and have an engine that you know will be reliable.

Check with the techies to see if there are bronze or sintterred bronze bushes in there, you say your metal flakes are copper coloured, could be some knocked out bush, or rust.