You shouldn’t buy flood cars without knowing what you are doing. Ignore engine for now, you might need harnesses and modules, seat frames, cushions carpets etc. once that thing gets warm you going to get mold (health hazard) and smells. And at any point can start getting warning lights and random electric problems. Even seen airbags fail due to corrosion from water.

Now the engine. That can go either way. If the car flooded past the engine height it can fill any cylinder with open valves with ease. Odds are it was running and sucked in intake or through exhaust, incredibly common for people to go into deep water and stall and suck water in exhaust. And the engine is likely toast at that point. If it was deep water you need to worry about transmissions, differentials, transfer cases etc have water in them too.

Sounds like a subaru. Is it a subaru?

Warranty admin 30-35k? What where? Thats awful. Dealerships just suck. My warranty admins made double that.

Only way i would go back to dealer is as management

Honestly lets see all four.