Looks like the bottom pulley to me. In my opinion you are unlikely to get a replacement engine as it's a simple fix given a new casing/pulley/nut.
That's going to depend upon whether the cam belt stayed in one piece and didn't slip. There also doesn't look to be a lot of room for that top pulley to get down to the bottom of the case so who knows what damage it's done on the way. I'd be in the new engine camp myself.
