Was the bolt just not there when you pulled the valve covers? If so, it looks like it was known by the previous owner/mechanic. That sucks.
It's broken down pretty deep -Since you have it tore down, maybe a machine shop could pull it (they'll probably use a long bit and an extractor too.) You could probably do it yourself if you can get a centerpunch down there to start the bit in.
I wouldn't start looking for a new block yet -there's still hope for this one.
Your pistons look pretty nasty -are you burning oil too?
Just for an idea, I googled a new short block:
$1504 (no core charge!) from RPM Ron's
http://www.rpmrons.com/Isuzuengines.html
I think that this is a good deal...