yeah i wouldnt think misfiring would have much to do with the lower end of the engine, or even the water problem. if there is water in your cylinders, you prolly get white steam coming out the exhaust? anyways, the misfiring could be a lot of things not needing a new engine necessarily. if it dont burn excessive amounts of oil, its probably ok. maybe the valves arent seated right or are floating? camshaft could be worn excessively, distributor or wires, lots of little things can cause it. one time my buddy had all 4 wires on the right bank melt the insulation and short out to the exhaust manifold, the blue smoke [bad engine

] only came out the left pipe of the dual exhaust lmao
make sure to get the problem narrowed down and dont just throw money at it. it could be a matter of a 200 dollar camshaft versus a 2000 dollar crate engine lol.