Hi Mike,
Sorry to hear about your teething problems with your boat.
The motor you're using is a two pole, rather short for the size hull and prone to overheating; on top of that the motor only gets half cooled as there will be air trapped inside the jacket, the outlet needs to be at the highest point!
If the 120A ESC cuts out, you're drawing way too much current, this could be the blunt prop or it's simply too big for this setup.
I think it's safe to say you overheated the magnets, effectively killing the motor, it'll still turn, but have no torque to speak of, draw massive amounts of Amps and run (very) hot...
What settings did your ESC have, you don't want the timing to be off too much, the standard 15° of the T-120 does not agree with all motors, better start low.
I would not go for a Ø28 mm motor, you'll lack torque, the 3060Kv 3660 Leopard motor is much better, but do make sure it's a four pole motor, giving you the torque you need.
On 3S you'll get close to 30.000 rpm at the prop, which is right in the sweet spot.
Regards, Jan.