Greetings.
I'm a new owner of a 1988 Westy that was picked up cheap because of a loud
engine knock. I would appreciate the list's help in a possible diagnosis
before I pay to have it towed since its destination depends on the malady.
(If the engine is toast I'm diving right into a Subaru transplant. If there
is hope for a few more miles it goes to the local VW shop.)

The symptom:
It is a LOUD knock or rap that sounds like a hammer hitting the block. It
is quite loud, maybe louder than a bad rod bearing but less of a deep
"thonk" and more of a sharp rap. Seems to be louder from beneath the
engine. If my calculations are correct, its frequency is about 1/2 the
crank speed at 5-6 times a second at normal idle (valve/cam related?).

What I've investigated:
Don't really know the history of this engine. Odometer has 142,000 miles on
it. Looks like heads have been replaced sometime. Oil level ok but don't
know when the last change was. Small oil seep (main crank seals?). Small
coolant leak from hose connection, nothing serious. Cold compression seems
ok (first stroke 90-100 tops at 140-150 for all 4). Starts and idles fine
with slight roughness. The oil pressure light goes out shortly after start
and stays out at idle, though the engine hasn't had the chance to
completely warm up during my investigations so don't know about hot oil
pressure. I've been afraid to rev it above 1500rpm or run it for long if it
is a rod ready to liberate itself.

I've grounded the plug wires for each cylinder individually with it idling
and there is no change in the knocking. I've popped off the valve covers
and cranked it. All the valves seem to move more or less. I've cranked it
with all plugs out and there is no obvious knock.

Early diagnosis:
I'm much more familiar with OHC in-line 4 engines. This WBX throws some new
geometries into the mental picture not to mention the complexities of the
hydraulic lifter push-rod valve train. My first intuition was a rod bearing
due to the loudness, but it didn't seem to change as expected when the plug
wires were grounded and its frequency seems half of what it should be.
Suggestions please?

I am grateful for your insights,
Eric