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I think you need some way of getting oil well distributed throughout the engine to minimize rust/corrosion.
I had a similar experience and the mechanic I engaged to assist me was very concerned about rust once the oil/water mixture was removed from the engine. We pumped out the water, immediately filled with oil and started the engine. Ran till warm, pumped out oil, re-filled oil, ran til warm, etc. until oil came out non-milky.
While sorting the starter out I would first liberally fog/MMO the cylinders and turn over by hand a few times to make sure that they will not seize up.
I think I would dry the starter and try it. You will know immediately if it spins
Getting the engine running and warmed up so you can do a sequence of oil change - run - oil change etc. until you get nice non-milky oil would be my priority. This gets the water out.
Hope that helps,
Peter
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