That thing will likely need a complete rebuild, or at least a complete
tear down and inspection.  I agree with your assessment that some
idiot used way too much silicone and it got loose in the case and
probably blocked off the feed line to that scored cam.  Look at the
wear on that sucker, it hasn't seen pressurized oil in a long time.
The real problem is you don't know what else was being starved of
oil.  The entire engine needs to come apart and be checked for wear
and damage.  Then you'd need to replace anything that's been cooked
and clean the oil lines thoroughly.  The only way to clean those oil
passages is by hand, I've never seen anything I'd want to put in an
engine that will dissolve RTV silicone.

So now you have a choice, is it worth it to you to tear down this
motor and give it a cash transfusion to bring it back to life?  At the
very least you'll need a new cam and probably need to send the head
out for machining if not a new head altogether (depending on how the
cam journals fared).  It's probably salvageable but at the cost of a
lot of time and what will probably be a fair chunk of what the bike's
value.  If it was me I'd park it for now and scour craigslist and
motorcycle junkyards for a parts bike with a mostly complete engine.
Then I'd use the long block of the parts bike and replace any missing
pieces with parts from your machine to make a complete engine.  If
luck is on your side you'll end up with a good motor for $100-$300
bucks and a month of weekends in the garage.   This is a fairly
involved job so if you decide to go this route make sure you know what
you're getting into.

Matt

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