Exactly. The formal name is Welsh Plug.The casting plugs (as you correctly ID's them) are just that - plugs to seal up holes during the casting process. They are not designed to be "freeze plugs" - that's a misnomer in the industry. SOMETIMES you get lucky and one or two will pop out and save the block. But that's more by chance - not by design.
Your flappers (if they still have the rubber part) are designed to prevent water from backing up and into the engine from the outside. If the engine had ingested water that way, it would not have run back to the dock/ramp.
There are other ways for water to get in - such as through the throttle body.
But, at this point, if you had clean oil to start with (unless there was water in the oil... and after sitting a while, the oil would be on top), and now have milky oil, there is likely a crack.
Do a compression check as a starting point.