Do a dry, then a wet compression test. If there's a noticeable difference, 15% or more, you've probably got collapsed rings. Also, try a cylinder leakdown test with air pressure applied to cylinders at top dead center compression, and listen for leaks at the intake, exhaust, and crankcase. Also look for bubbles in the radiator during the leak test. The knocking noise sounds like a collapsed piston or other nasty situation. If you rehab it, don't trust the pistons- - - -they're probably distorted in the skirt area below the wrist pins and they will have too much skirt clearance.
Jerry

"It is better to be silent and be thought a fool than to speak and eliminate all doubt!" - Abraham Lincoln
Cringe and wail in fear, Eloi- - - - -we Morlocks are on the hunt!
There is nothing noble in being superior to your fellow man; true nobility is being superior to your former self. - Ernest Hemingway
Love your enemies and drive 'em nuts!