I keep hearing people talk about this. Can someone explain to me what exactly happens and what problems it causes? I mean, is your whole motor f'ed if your sleeve sinks?

 

well coolant would start seeping into the cylinder, it would be pretty obvious by all the white smoke. And yeah you are pretty much FUBAR because the sleeve needs to be taken out.

 

best case scenario: substantial damage has not yet been done, you have enough piston-to-deck clearance to shave the deckface and still have reasonable compression and piston-to-valve clearance, and the sleeves don't sink again/anymore.

worst case: enough coolant gets into your cylinders that you hydrolock your engine, snap a rod, and throw it through the side of your block, rendering it a total loss.

most commonly, though, you'll admit enough coolant into the cyls to emit white exhaust, and enough oil into your coolant to see it when you remove your rad cap. the coolant will corrupt your oil and wear on your components (cyl walls, bearings, crank/rod journals, etc.), perhaps making it more likely that you'll spin a bearing, or mess up something else.