Greetings again.
Thank you all for the great input! It seems that most are leaning toward a
collapsed or bad lifter which is quite a relief. I have tracked down the
previous owner and the circumstances around this knock showing up may
change things a bit.

Apparently, He had been driving it regularly and was out driving one day
and it just started making the loud knocking noise. (Please see "'88 engine
knock diagnosis" posted today for description.) He stopped the car and had
it towed home. Upon checking the oil, he said he found it to be ~1.5 quarts
low. It hit the newspapers soon after. (He did refill the oil.)

So... I've heard a lot about gradual leak down, but do lifters just fail?
How sensitive is the WBX to low oil?

Thanks again,
Eric

'88 Westy percussion section