On my D2-5J the top of the piston was chewed up and spit out the exhaust. It idled normally till we quit panicking and shut it down.
(No Putt-Putt)
It bent the valve and the connecting rod in the process.
OK, that out of the way.

I guess it confuses me the Clutch issue and the bogging down of the pony motor.

Guys, what if he left the transmission in some gear and tried to stay with the pony and a piece of clutch material was sliding around in there where its not supposed to be? It would drag the pony because it wouldn't have power enough to move the machine.

My comment would be to engage the decompression lever (start position), make sure trans is in nuetral, turn engine by hand on the Fan. Have somoene with a flashlight look down inside of your main clutch housing. I can turn mine on the Fan, but maybe you can not on yours.

"tried to stay with the pony"
Should say START not Stay!

Seeing as how everyone is giving it their best guess......I would have a close look at the clutch plate. These units are somewhat famous for tearing the teeth off and it is possible to get the pieces jammed between the flywheel teeth.

Thanks for all of the input guys. I got it to crank over today. Yeaa!! I removed the injectors and cranked it over. I t went not easy but it did. I hooked things back up and she blew black smoke rings but woulden't fire up. Making headway but unsure where to go from here?? Could a clogged injector have been the problem? if one quit would the motor just die like that?? Any input on where to go from here will be appreciated, Note the rods looked good and straight.

No not likely one clogged injector would do that......but a stuck rack would.
Take the side cover off the fuel injection pump and check for rack/throttle movement.....and that all the pump lifters are traveling up and down.

Look for metal in the oil filter and in the bottom of the pan and get a good gauge on the oil pressure before you do anything else. Sounds like there could be a spun/stacked bearing in there that's loosened up from what it was when it first seized and was still hot, but still tight even when it's cool.

When you had the inspection covers off the side, did you notice one of the rods looked like the cap and maybe the crankshaft throw had gotten hot?

If there's no problem with any of these things, I think Old Magnet is onto something with the rack/governor problem. You can easily open the cover on the side of the injection pump housing and watch the rack move back and forth as you move the throttle control. You governor could have come loose inside and not be opening the rack or responding to load changes any longer etc.

I will try these things tomarrow. thanks

I got up at the crack of dawn determined to figure this out!! cranked up the pony for a little while after taking of the fuel reck cover and trans. cover and kicked in the main motor. All of the plungers were working fine then she started to run on her own with black smoke and a puff of white smoke mixed in then I felt something on my neck then my arm OUCH!! UTOHH!! ITS METAL SHOOTING OUT OF THE EXHAUST!!! small pieces of hot metal, DAMM!! Oh well problem succesfully diagnosed. Sounds similar to one of the earlier replies here. (drujinin). The question is where do I go from here the hour meter says 350 hrs. and the rest of her is in real good shape. How much will this cost to fix if I had the time, and shop I would like to have at it myself but not shure what of obsticles I my run into. ie special tools etc. not to mention the fact I have a full time job and afarm to run and cut 6 cords of firewood yet. Any ideas?

Well I guess you know what you got to do wether you want to admit it or not. First thing is (do not try to start it again!) Second would be to determine how soon you want the thing going again. I would pay someone to cut your firewood before I hired a mechanic. (hard labor v.s. skilled labor) There is tons of information available on here to figure it out. Maybe someone has another motor that you could put in. Does not hurt to try. You do not need a ton of special tools to do the job. You will need spare time and patience. I would start by draining all the fluilds and pulling the heads. Hot metal coming out the exhaust. I am going to guess pistons and valves. Is the motor holding oil and water? Is there water in the oil? I am sure there are quite a few folks on here that have seen this one before.

Are you a gambler? It's possible to take out a rod and piston by going in through the inspection covers on the side of the engine. You could do one or all 4 if you want to fix it right.

First step has already been recommended. Get the head off and look at the pistons and bores of the cylinders. It would be a great time to have the valves ground and also have a check on the crankshaft bearing clearances with plastigauge and a good looksee while the caps are off. Since you don't have an operable oil pressure gauge, guessing they are alright since it was running fine is a bit too much of a gamble for me.

Cost will depend on what you find that has to be replaced plus a "valve grinding" gasket set. Probably 4 pistons and ring sets plus the gasket set and oil pressure gauge would be a minimum unless you want to risk another coming apart and just replace the bad one with a used piston of the same design. Of course you could also find that the sleeve has been damaged beyond honing to clean it up and have to replace a sleeve.

A job like this is a slippery slope, you have to be guided by what you find when you tear it down, but if you don't watch out you'll be doing a complete overhaul. There's a lot to be said for that approach, it's costly, but maybe not so costly in the long run.

I'd say go for it. You'll learn a lot, including some useful new words, bust some knuckles and sleep well at night when you've been working on it.