This is how most modern diesel (actually diesel-electric) trains work.
The issue with a big diesel engine like this actually turning the prop or wheels is the size of the transmission required. The engines are massive and the transmission would also be massive to cope with the power and torque. You also eliminate a moving part so much more reliable.
It seems so backwards to me to convert diesel into power and use that to drive an electric motor. It seems so inefficient, but I supposed it wouldn't be a thing if it was inefficient.
Lots of extremely large engines are "combust fuel to turn a generator to turn the actual engine", and have been for decades. Electric motors are great.
Building brushless motors that work when submerged in salt water is almost trivial. The only parts that matter with respect to corrosion is the insulation on the windings and the material the bearings are made from. The rest you can just paint with whatever you'd normally use to avoid corrosion.
