Knock is bad. Engines aren't supposed to make knocking sounds.
Your dad's engine might be hangin' in there fine, but your dad's engine doesn't hit 7000 rpm either.
Could be overadvanced timing ... detonation is never a good thing. Could be something more sinister going wrong internally ...bearing gone bad (if you throw a rod it'll cost you... though that probably would've happened by now). Could be a whole host of things.
A knocking sound coming from your engine has the potential to spoil your day real bad, real fast.
The point is that no one here can diagnose what the problem is (no one can) without properly checkin' out the car... which is the job of a qualified mechanic.
Get it checked out by a good mechanic. If it's nothing serious then you're only out a few bucks.
If you don't get it checked and it is something serious, your wallet is in for a world of hurtin'. ... and you'll kick yourself for not doin' something about it when you had the chance.
Don't just forget about it because you didn't touch anthing that could mess things up. It might just be coincidence that something's gone wrong just at the very time you're modding your car... something that would've gone wrong anyway.
Get it checked!
Good luck. Hope it ain't too serious.