My 240 Engine experience is primarily with B230F units, but I suspect the following will apply to all injected 200's. It sounds like the knock sensor may be bad which would cause the ECU to excessively advance the timing... and eventually fry the valves. Besides replacing the the sensor with a new one, the best test is to set the idle up to about 1500 RPM or so, and hit the upper passenger side of the block with a metal object (perhaps a hammer or pipe). You will also need to have a timing light hooked up and pointing at the timing marks. When you hit the block, you should see the timing back off for a cycle or two, if it doesn't, either the knock sensor or its harness is bad.

Until this problem is resolved, you should MINIMIZE the driving / NOT DRIVE the car as it will tear up the valves and seats if it is knocking. A knock sensor is a LOT cheaper than a complete valve job!

Later,
John
1990 240DL Sedan Auto