Well the poor exhaust valve in number five is probably not what made the noise you heard initially. I would have thought the garage would have started it up to identify the noise or at least to give themselves some ideal of where and what it might be.

A major problem in the block does not heal itself. The milage after the engine change may be about right for something to have loosened up as I think you changed a flexplate for a flywheel for the conversion. Even random starter gear contact noise is possible.

This is the problem here as there are many possibilities. Did you ever verify oil pressure is present for certain? Even just cranking with a gauge installed would verify it .Funola unfortunately is right. Far too many shops are either dishonest in general or unskilled or incompetent in their trade.. Or have some combination of qualities mentioned. Has anyone dissected the oil filter to see if anything is in it?