I bought a manual 1980 240d recently with knowledge that the engine "had a severe knock." The owner had performed an engine swap by putting in in a 1982 617 turbodiesel.i believe he cut the driveshaft himself and if i remember correctly he said he rebalanced the flywheel? is that a thing with this engine swap?

He sold the car to a man who abused it. one day he filled it with petrol and i think drove it on petrol for at least a little while. thats when he gave it back to the previous owner. the knock from a spun rod bearing on cylinder 4 was present the day he gave it back to the previous owner.

I don't know what I should do. Is it unreasonable to swap in a used crankshaft and rod, replace piston rings and bearings and then drive away? how can i tell exactly if my block is still useable?

my options are: buy a running 300d so i can verify the engines health. this will cost about $1000 give or take, plus any machining costs (wont i have to rebalance something? help me please lol).

option 2 is replacing it with an entire pick n pull engine. i dont know how expensive this will be or what costs will be associated with going this route..

option 3 is keep my block and just replace the broken parts, plus refresh the engine like the seals the bearings the piston rings etc. my engine-savvy friend acts like it will be simple but he has admittedly not worked on diesel engines. a couple people online (benzworld) have told me its not so simple as to just replace the broken bits with these engines.

so what is entailed exactly with rebuilding one of these engines? how do i know if i should keep the block i have or replace it entirely? what would you do?