I have heard of MB engines running with the piston completely gone, just the rod thrashing around in the bore. PO (it was a new owner who brought it in) claimed he "didn't hear anything funny -- it just runs rough"
Serious knock up front can be a dead chain tensioner letting the chain slap, a bad piston/rod, etc. Can't give much advice without actually hearing the noise. I'd for sure not run it!
I suppose a hole in a piston would allow diesel fuel to accumulate in the crankcase -- you'd be able to smell it in the oil.
Peter
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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!
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