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This is absurd, of course, but it sounded like a dry knock not a wet knock.  Check your damper/crank pulley.

I saw the rust title and the number of pages and can't really remember all of the details of this car and engine.  Might be worth writing up a new "state of the situation" post.

I did lash the valves before I put the engine back in but I will check again.  

As Zed Head suggested - here is the current situation

All the structural damage has been professionally repaired.  Engine ran fine before removal.  I did a compression test and it looked good.

Engine Work done:

new fuel injectors

oil pan gasket

lashed valves

replaced EGR

new oil filter

rear main seal

pilot bushing

new master cylinder for clutch and brakes

Transmission:

clutch fork

pivot ball

throw out bearing

new fly wheel and clutch

Suspension:

full rebuild of front suspension

rebuild of brakes

new wheel bearings

new hubs


I can already tell you that the lash on most of your valves is too tight. The back side (non-lobe side) of the lobes should never be clean like that. That's a sign that the valves are never completely closing and the base circle is rubbing all the way around.

And valves that never close can make some strange noises sometimes. I can hope that it's as simple as that?

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