This is exactly the reason whyt when you buy a car its good to get the Belts and service done first off.
Regardless of what a book says.
That way you can safely know when the belts have been done.
Sorry to hear about the above. You cay get away with a couple new valves, head gasket and skim plus all the belts.
But depending on how dented the pistons are it will always runh poor due to the loss of compression.
Best bet is to find a new engine (£300) find someone to fit the complete unit.
Remembing to do the belts and may even be worth getting a new clutch thrown in while the engines out.
Alfa 166 2.0 Twinnie - LPG and a few trick performance parts