IF this is the same company that makes the Generac generators then I am surprised you got 775 hours on it. I have seen several of them not last 200 hours on generators.
I would take a Kohler over a Generac and a Honda/Kawasaki over the Kohler. B&S would be right there with Generac.
All that said I will second that you more than likely have a valve seat that has came out of the block. If the seat is not beat up too bad I have had fairly good luck reinstalling them. Pull the valve out and drive the seat back into the bore it goes in. Than take a center punch and stake all around the seat. Lap or grind the valve seat and reinstall the valve.
I have seen some that last for years after that. Some don't last five minutes either. LOL
If the warranty covers the parts then I would replace the block. I wonder if they will spring for a short block??? If they don't I would make sure they give you new piston rings.
Might be a good time to "trade" after you get it running.
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