Water doesn’t compress.
IF you had water in combustion chamber (not saying you did), and if engine was either running or cranking, it will bend and/or break things.
The /6 has a long connecting rod and I’ve seen a few bent (from water) over the years. The knock noise is from the bent rod hitting the block – which can damage the block if not tended to. In many cases, tossing in a new cod (and bearings) fixes you right up.
I’ve worked on a lot of flood cars over the years. If the cars are not started, changing the fluids, making sure anything electrical is dry and carpet cleaned well, you can get a car to last a good while longer. If it was started, attempted to start or running at the time, getting the water/fluid (or oil) cleaned out is both gross and time consuming (especially automatic transmissions).
On engines, the first thing I check is the air filter.
If the paper element is wet/damp, then some flood water has gone through the intake system and often means other damage. If the filter is dry, then this is generally not a problem (in most cases).
Most cars on the marketplace, ’76 and newer, has the air intake down at bumper level or lower. That would be ’77-89 (all) FMJ’s. Most (if not all) ’76 F’s didn’t use outside air.
Been my experience that when many people (not you, just speaking in general) drive through high water, the water slows down the car, so most people will apply the gas (sometimes a lot of gas) to keep the car moving. Sense the engine is a (big) air pump and sense engine intake is at bumper level (or lower), it will suck the water right up like a Shop Vac hose stuck in a full bathtub. Once car is turned off, the water in air cleaner/ductwork will drain out leaving the air filter wet. Air filters do not get wet even on rainy days because there is enough air flow to keep it dry.