04 Taurus 3.0 w/ major engine trouble

I've got a friend with a 2004 Taurus with the Vulcan engine and 74,000 miles on it. Just last week on the way to the beach, it "completely lost power and started this very loud knocking sound" (I wasn't there, so I don't know all the details). He managed to get it to a small garage out in BFE, owned by a guy named Kim who finally got around to it yesterday. We stopped by today, and I was able to take a listen (it sounds like it's coming from the top of the engine, on the side closest to the firewall; not loud enough to be considered banging, more like the sound as if someone took a small hammer and was hitting it hard on the valve cover). Kim only poked around the outside of the engine, and to quote: "could be a rocker arm or something like that." He didn't open up the valve cover or drop the oil pan or anything like that yet. Anyway, just curious if anyone here had ever heard of such a thing happening to this engine, and maybe a list of what it could be. The book value of the car is about $6,000 or so (running, of course), so we're just trying to figure out what the next step should be. Thanks in advance!

I'd suggest starting by pulling the dipstick and looking for signs of metal such as actual filings or the oil having a grey appearance to it. If the oil looks fine, and is at the proper level, try removing the serpentine belt and starting the engine to see if the noise is still present. Don't run it for long this way, just long enough to know if the noise is there or not. If not, then the noise may be due to one of the accessories being driven by the belt rather than the engine. Also, I'm not sure if the 2004 Duratech drives the water pump off of the camshaft, but if it does, try removing the water pump belt and see if the noise goes away then. It would be a real shame to scrap an engine due to a bad water pump or power steering pump....

-Rod