98k is alot of miles for a car thats two years old, you must like driving.
My car turned 4 yesterday and i dont even have half that mileage.
Anywho, the timing belt drives everthing on these motors and is bathed in the motor oil.
So if the belt breaks everything in there likely will.
The oil pump is a variable vane type if i remember correctly.
When the vacuum pump goes it wrecks the motor on these also.
Someone here recently just had the vacuum pump fail on his 1.0 and it wrecked his motor.
So yes, you need a new engine.
What has the dealer said as far as cost or being out of warranty for miles?