Jeff can tell you more, but I have a ProCut which is a chainsaw mill, but on a carriage you build yourself. The basic premise is still the same, a chainsaw runs it and that is the weak point. As Jeff mentions, it is slowwwwwwwwwwww....by that I mean you start a board today, and finish it tomorrow. Okay, maybe not that slow, but you get the idea.
I mentioned in my first post that I am working on a new sawmill as I just cannot cut enough with that chainsaw mill. I am using an old bandsaw I have (Gilliom) and mating it with the Procut carriage to get the best of both worlds. The beautiful long log carriage of the Procut, but a faster cut and less waste with a bandsaw. The latter is super important if you have small logs. It is all about the kerf. A chainsaw has a 3/8 kerf, while a bandsaw has 1/16th of a kerf. lets say a log has 16 boards in it just for easy math. With a chainsaw mill, you would only get 10 boards, where as with a bandsaw you would get 15 boards. Explained better; 6 potential boards would be reduced to sawdust with a chainsaw mill, whereas only 1 board would be lost to sawdust with a bandsaw mill. Another reason to consider a bandsaw mill is the cost. It is possible to speed up the chainsaw mill somewhat by buying one gigantic chainsaw to power it, but by then you are going to be $1500-$1800 in just a chainsaw alone. You can buy a bandsaw mill for $2000. Granted the bandsaw mill can only cut wood, and with a chainsaw you can saw lumber AND cut wood, but as much as I log (everyday) I don't have the stamina to run a huge chainsaw.
But that is just something to consider, and I got plenty of sawmills. A circular sawmill, a shingle sawmill, a chainsaw sawmill, and soon a bandsaw sawmill. I am building the latter for a reason. better conversion of logs to lumber with less waste.
Your picture did not show any headrig parts so it is impossible for me to say what that saw was used for. Circular saw blades of that diameter were used for a lot of different things. It could have been a shingle mill, used for making shingles. It could have been a bucking saw, used to cut pulpwood into 4 foot lengths as was the practice back in the old days if an old paper mill was in your area (this is rather doubtful though as they tended to use steam engines as paper was not invented until pretty late in the 1800's and used softwood for their long fibers). It could have also been a resaw, which then (as it is now) a saw that cuts wood coming off the main saw rig to width. It's position does suggest POSSIBLY a resaw saw blade as it would be an accessory saw and driving off line shafts coming from the main water wheel.
That kind of leads to another point, most waterwheels powered line shafts that had an amazing array of pulleys and gears, and the reason was simple. Water flow was seasonal and they needed to get as much work out of that flowing water as they could. That same water wheel was sped up or slowed down to get the speed needed to run jointers and planers, as well as resaws and sawdust blowers. The Maine State Museum in Augusta, Maine has a nice sawmill display where the sawmill works is on the inside, and Museum-Goers walk down winding ramps from the top to the bottom. The amazing array of belting would shock you. Now on bigger sawmills locations were often rented out to other trades other then making boards. A gunsmith might rent a bench out so that the water wheel could power a metal lathe, a tailor might have a spot in the mill to power his loom, and a furniture maker might have a wooden lathe powered all by the same water wheel. The reasoning was simple, it cost a lot of time and money to develop a mill pond, dam and construct a water wheel. Why not just rent out a spot in the sawmill and tap into the waterwheel already at work, and use the flow of water during Spring Freshet's?
Now both of you should realize this too, more than likely you are the oldest homestead in your area. Back in the old days often times a sawmill was one of the first buildings to be built in a community as it was needed to build the houses and barns.
As for building a sash type sawmill Jeff, I looked into this pretty hard and would have probably built one if I had not had the old bandsaw kicking around. In my case I was going to just use a pitman powered by my farm
tractor to make the sawblade go up and down, but naturally you would just use the water wheel. A ramp made out of planks sticking into the mill pond would allow you to bring the log into the sawmill and onto the carriage with block and tackle...or an electric winch. They can be bought pretty cheaply now and saves a lot of work with the ole arms. I am not telling you how to make your sawmill my friend by any means, just throwing out some ideas...