AFAIK - Hydrolocked engine would happen if you drive through a river i.e. the intake took in an entire breath of water. Is that what happened? Sorry to hear!
Not trying to marginalize the crappy feels here - especially since it is merry holiday time of year -- but -- I might recommend getting a second opinion on this assessment if you can. Seems a stretch.
This oil levels went up way above where it should have been, and it is completely seized - wont' even turn with a wrench. It could possibly be the leaking in there coolant - but the engine won't even turn at this point.
No argument that an engine can suffer hydraulic lock, but I'm with @Mr.Sneis here. Attributing it to fuel, mmmm, dunno about that. Both valves are closed for only about 1/3 of the full cycle, so most fuel would evaporate out before you got to the shop.
A leaking fuel injector can cause a hydrolock, if it's bad enough. It leaks while the engine is shut off and can fill the cylinder. The O2 sensors are not involved.
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