Engine is out!
 

Fianlly got it out yesterday (well it is still on the K-member due to the before mentioned cracked oil pan on the new engine) but tore it down to the block and so far, to my dismay, I can find nothing wrong with it. Lifters all checked good, cam was fine, timing chain was fine, valves were fine, springs were fine so I am at a loss as to what was knocking in there. Still have to get alook at the rods so maybe it was losing a bearing but who knows. Too late to worry about it now.

oh well..... out with the old, in with the new :)