Ok. I have some personal insight into this situation.
With my old distributor, the oil pump driveshaft would get stuck to the end of the distributor. Even with the clip on the driveshaft, it would be so stuck, it would just pull the clip off and the distributor would come out with it. Well, when I went to put it back in the motor, I left the driveshaft on the end of the distributor, and low and behold, it fell off, and went inside the motor, just like your problem. I was stupid enough to try and start it after all the telescopic magnet tricks wouldn't work. Well, it def. got stuck in the rotating assembly. Basically the motor wouldn't turn.
And here's the fix....
You need to unbolt the trans mount, motor mounts, and jack the motor either from the balancer or lift it with an engine lift. With a dual sump pan, it's impossible to take the pan all the way out with the motor in the car, jacked up or not. Jack the motor up till the bell hits the firewall. This will give you enough room when you unbolt the oil pan to look around and see where it is. Mine was stuck between the crank and the block, and it bent the living **** out of the oil pump driveshaft. DON'T START IT. You don't want anything breaking or getting hurt, it's not worth it. All I had to do was drop the pan, and whala! It was right there, pulled it out, and put a new pan gasket on, and bolted her back up.
I have done this, and replaced 2 oil pumps in 5.0s with the motor in the car. You can't get the pan out with the motor in the car unless you unbolt the bellhousing and trans and lift the motor by itself, but there is no need for it. Just bite the bullet like I did, and drop the pan and get that thing out. Don't leave it in there, because for one it will never start, and two... IF it does, say bye bye to your crank and or block and or rods... It sucks, but you'll be glad you did it right!
Nick