In my opinion, regardless of whether your sprag clutch has failed or not, the fact that you have pieces of metal in the oil is a significant problem. That metal will have got into the oil-ways, starved the valve train and cylinder head of oil, and started to score the camshaft journals.
My personal view is that trying to fix this engine is a waste of time, unless you want the experience of learning how to do it.
I would recommend swapping the whole engine for as late and low mileage a replacement as you can find. Other than the fact that you really need two people to manhandle a heavy engine in and out of the frame, it is a pretty simple plug and play type job.
I went through all this on my 2003 1200. I found metal in the oil at the 15,000 mile service. I stripped the engine down, but never found the root cause. I could see no missing metal from anywhere, but plenty of evidence of scored crankshaft main bearings and camshaft bearing journals. An 11,000 mile 2002 replacement engine was £500 over here, took me about 8 hours to swap them over. By the time you add up bearing journals, cam caps, head gasket and various oil seals, a whole new engine works out cheaper.
I wish I could give you a happier, easier answer, but I fear an engine swap is your best course of action now.
03 1200, '10 1400GTR
Bath - UK
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