need to replace a sc400 engine at 60,000 miles???

I bought a used sc400 1993 with 60000 miles on it. Carfax is clean and the 60000 mile service was done at a dealership at 58,000 miles one year ago(almost exactly) with no problems detected...got the car yesterday and went to get it smogged at a friends auto repair shop...did not pass!!! HC levels 10 times normal and his head technician said a new engine is NEEDED!!! I was floored(shocked) I called the dealer near my home asap and told them the situation and they said that they have NEVER had a lexus V8 go bad at 60,000 miles Oil was regularly changed and I have detailed service records from the previous owner....In fact the last service was the major 60000 mile service and it was done one year ago!!! only 2300 mile driven since then!!! So the dealer has the car now and will check it out to see what is wrong...here is the main problem...

1) When you turn on the engine and it idles, there is a faint noise that comes from inside the engine compartment when the belts turn...like a constant "shook, shook, shook" but not extremely loud can notice it only when idling and when driving slow speeds...at higher speeds engine runs smooth...

2) when the smog was being done and the engine was revved high, oil seems to spurt out from BOTH exhaust pipes!!!

3) Smoke comes out when the car runs, expecially when you step on the gas when accelerating...

4) ANY EXPERT OPINIONS OUT THERE or anyone have the same problem???

PLEASE HELP PLEASE HELP!!! I am worried about this situation...The dervice manager at the dealership said that he's seen a similar problem once before when some power steering fluid leaked into the system somhow and it came ou the pipes and was mistaken for engine oil!!!

STEVEN(the service manager) at the dealership said that he was shocked....but one of the "RODS" are shot and it will need a new engine(OMG I COULDNT BELIEVE IT)...there are detailed service records for the car and I am still a little baffled.....59,600 miles now last year july 3rd, 2003 there is a detailed receipt for a 60,000 mile service and the car had all fluids changed and the mileage was 57,000 miles!!!
ANY LEXUS REPRESENTATIVES PLEASE HEAR ME OUT I NEED HELP!!!!
I WOULD LOVE FOR LEXUS TO INSPECT IT TO DETERMINE THE CAUSE OF THE FAILURE SUCH AS ABUSE OR DRIVING WITHOUT OIL>>>BUT THE CHECK ENGINE LIGHT NEVER WENT ON....ONLY THE OIL LEVEL LIGHT BECAUSE IT WAS BURNING UP THE OIL...SINCE THERE ARE DETAILED RECORDS...THERE IS NO REASON FOR ME TO BELIEVE THERE WAS NEGLIGENCE OR ABUSE!!!
I've owned an RX 300, now a GX 470, my friend drives the LS430, I am a hige lexus supporter!!! but what will i say if this is a faulty engine at 59,600 miles !!! This may be the first defective engine ever???
If lexus decides to extend a warranty based on the miles and not the year...I will be truly impressed and appreciative....CUSTOMER SERVICE #1...but if not....what else am i to think about these cars or their engines...most importantly about lexus' committment to their loyal customers???

ANYONE PLEASE HELP>>>GIVE ME SOME LIGHT AT THE END OF THIS TUNNEL instead of the blue smoke and black oilspewing out of the exhaust!!!

that sounds odd having to reaplce it at 60k miles and it was in good shape when you bought it