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HELP! '95 960 - After oil pressure loss, repair, tune-up; Rod knocking? New engine? 900 1995

Greetings all! Well, here goes. My lovely wife drives a beautiful 960 30-100 miles a day.
Over a year ago, the car had overheated due to a failed cooling fan and subsequent radiator leak and was successfully repaired. Then 6 monthes later it was spewing oil from dipstick. Found sludge clogged flame/oil trap and cleaned; all was well. Then suddenly last week, lost oil pressure but maintained low temp by running heater full blast(and possibly due to previous PTFE oil treatment). Assuming more sludge clogging, did a complete oil flush & change, cooling flush & change and a tune-up to boot. Result, oil pressure, lots of power, happy wife.
Two days later, a very loud tapping/knocking occured and within a few minutes, a slight loss of power. Drove about a mile to my driveway and let it sit overnight. Next day, starts right up but there is that noise and when accelerating, sounds like a couple of rocks clanging about. Verified all cylinders firing, no compromised gaskets, leaks, nothing. Local mechanic checks it out briefly, states that it has a bad rod and due to previous loss of oil pressure, recommends completely new engine, that'll be $5,000 please. Sure I'd love to replace it(*&#$@!) but why not replace the rod/rods, lifters and leave it that? I need advice!!! Any help would be greatly appreciated! Doc






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