I am sure you should be able to find the part you need locally.
lots of dimantled D7's around.
Here are some listed for sale:
http://www.machinerytrader.com/list/partssearch.aspx?partnum=6b4005&pst=starts
does that plate cover the water jacket? if it does, then it probably broke as the weekest link. if it doesn't cover the water jacket, then the plate broke from water in the crankcase, likeley from exhaust. you can use some quick metal silly-putty type stuff to patch it for a test, or just cover it with a flat piece of steel like you had mentioned.
water in the oil is more than likely from the exhaust being left open, how many cans blew off it in 18 years of sitting, i have gone outside and found some of my engines have had the can blow off the exhaust.
good news is the engines run, most people don't get that.