The engine can be rebuilt, but it will be expensive ($4500 - $5000 as stated above). If you did the work yourself (unlikely considering your posts and profile) you could probably get it done for < $1500. It sounds like the rest of the car is in decent shape and if so you might be able to sell it to someone who has the ability to do the repairs or do an engine swap. You probably won't get much money, but that depends on the condition.

__________________
07 E350 4Matic wagon, 06 S430 4Matic, 99 SLK 230
retired W210 (x3), W124, W126