That little bit of cracked ceramic outside the boiler isn't much of an issue. Might have happened when something major blew inside the boiler, but that external bit is nothing.
And good news. You have the V3 boiler so the fix is easy.
In addition to the new element, buy a new boiler seal o-ring as well. Might as well replace it since you have top open a boiler.
https://www.espressoplanet.com/Rancilio ... asket.html
https://www.espressoplanet.com/Rancilio ... asket.html
Step by step as if I were doing it.
Take out the 4 screws from the top. Remove the reservoir and remove the top. (I think you already did for the picture).
Loosen the 2 philips screws that hold the back(Stainless) To the frame (Black) near the top-middle of the machine, you'll see them looking from in front of the machine, near the top of the black frame in the middle of the machine.
Look down the inside of the back of the machine where the reservoir usually sits, see the notch cut out at the bottom middle of the back? There's a screw in that notch that you can get with a long philips screwdriver, loosen it.
With all those screws loose, you can pull the stainless back panel to widen it and have it clear the frame as you pull it back and out at the bottom then lift it.
Take another picture or 2 that captures all of the wiring connections well. Just in case, ya know.
Mark each of the wires with a Sharpie that goes to a component on the upper boiler. Use whatever markings you like.
(I use E for Element, H for High (Steam Thermostat), L for Low (Brew Thermostat), and B for Break (Safety Thermostat).
Pull all wires off of the thermostats and element.
Use a crescent wrench (I believe it's a 17mm) or a small adjustable wrench to loosen each end, just a little turn each, of that copper tube between boiler and steam valve. Once both ends are loose and you're sure you're not torquing up and twisting the copper tube, unscrew both ends and take the copper tube out.
Now, at the bottom back of the machine, you'll want to use a small adjustable wrench to hold the elbow at the pump outlet and (I think 12mm) crescent wrench to unscrew the braided hose's fitting from that elbow.
Now you'll need an allen key, I believe 4mm, for the 6 screws around the middle of the boiler. If you have a nice, long, T-Handled Allen key you'll want it.
Loosen each of the 6 screws just a little, then back them all out about 4 full rotations. The boiler probably won't start leaking yet, the 2 halves will be stuck together by the o-ring and any scale that's built up in there.
Now, take all loose items away from the machine, grill, drip tray, etc. Empty the kitchen sink.
Coil the cord up to keep it tidy, carry the machine to the sink and turn it upside down over the sink. If the boiler pops itself open, then air will rush in around the middle and the water will drain out through the hole where the copper pipe used to connect. So long as the calcium isn't bad it should drain in about 15-20 seconds. If the boiler doesn't pop open around the middle where you loosened the 6 bolts, reach in and give the boiler a jiggle. In the worst case scenario, one person can hold the machine upside down over the sink while another person gives the boiler a smack with a little hammer.
The small amount of water that splashes on the outside of the side-thermostat isn't a problem, once you stand the machine back upright, wipe up the splashes with a paper towel or dish rag.
Take the 6 bolts the rest of the way out. Lift the upper boiler off of the lower boiler. Inspect both.
This is the point where you decide if you want to give the upper boiler an immersion descaling, just do a mild descale of the whole machine or if it doesn't need descaling at all. If it needs it, clean what you easily can now while it's all open to the world.
Now, take the big nut (Outside top of boiler)off of the old element, put the new element in and tighten it with the big nut. Throw away the old red o-ring if you bought the replacement. Reassemble in reverse order of everything here.
Note: When reconnecting the copper pipe from boiler to steam valve, hold the pipe so that the fitting is nicely centered in it's seat, then tighten the threading with just your fingers to keep it positioned. Then the same for the other end. Lastly, tighten these two ends gently. They are compression fittings, they seal just by having the soft copper pressed together at that angle, they're not threaded steel pipes that need to be torqued together by a gorilla. After finger-tight, less than 60 degrees (One face of the hexagonal nut) should be more than enough.
REMEMBER: Your machine now has no water in the boiler. It is best to leave 1 of the element connections disconnected after connecting all of the other wires. Then, before putting the top back on the machine, open the steam tap plug the machine in, turn it on, put a mug under the steam wand, turn on the pump switch and let it fill the boiler until the water runs out the steam wand. Shut off the pump switch, close the steam wand, UNPLUG THE MACHINE again before touching the element wire to connect the second electrical connection, then plug it in again and flip on the pump switch to run the machine at maximum pressure. You should see water flowing back to reservoir through the second hose because there's nowhere else for it to go with all the valves closed. So long as you don't see water leaking anywhere, you've done a good job. You deserve a nice espresso.