Is there a possiblility water is sitting on the bottom of the engine and can not drain?
No, In your other thread you said you'd drained the crankcase and even tilted the engine up a little to get it all out.
Your crankcase got water in it somehow, maybe from condensation or whatever. If you would of drained the oil before starting you would of got most of the water out too. But when you started the engine like this it blended/whipped the water and oil together into a thick-sticky white paste that's still clinging to to every single surface inside your engine.
Simply removing the drain plug wont clean this stuff out now, its all stuck inside like peanut butter stuck to the roof of your mouth. You'll need to wash it out somehow.
I already explained how I'd clean it all out with a $5 gallon jug of mineral spirits in your other thread.
But a couple alternatives would be completely disassembling your engine and clean it out with some kind of solvent like mineral spirits that way.
Or you could take the easy way out by simply letting the engine run for an hour or so to hopefully let the heat evaporate all the water out of your oil and that paste. Although the water in your oil wont be lubricating as well so you'd be risking further damage to your engine.
Whatever you choose, you need to do something asap because all the steel/Iron parts inside your engine are most likely rusting while your waiting around.
And yes its completely normal for mufflers to get
extremely hot within just a few seconds of starting the engine. Sometimes mufflers get even hotter than normal from excessively lean air/fuel mixtures, (carburetor problems) but that's the least of your worries right now.