Engine Knock 240D

[insanespiv]

I just aquired a 1983 240D with 189,xxx miles. It has no power and what I would call a signifigant engine knock. Max speed I can get it up to is 35 on level ground. It is my goal to get this car back to good shape. I would like this to be my daily driver. When I bought it I knew it would be a project and I am willing to put the time and money into it. A group of my friends and I are looking forward to working on it. We all have some mechanical experience but this is our first diesel project!

This is what we have done so far (I know its kinda lame but we had to start somewhere) Changed oil, oil filter, air filter, spin-on fuel filter, and in-line fuel filter.

We are planning to do valve adjustment and diesel purge Saturday.

I need to know what I need to look for and what to inspect to diagnose the engine knock. Is there anything I can do while I have the valve cover off.

I plan on replacing the timing chain, transmission filter and fluid, power steering filter and fluid, and replacing the injector nozzles with bosio nozzles. I want to do all this but I want to get the engine knock fixed before all of this. If I have to do a total overhaul I am looking at some serious time and money so these will have to be later. I would also like to do the work myself if at all possible. I can also take any pictures that you would like me to throughout the entire process. Thanks!