Sometimes it is difficult to tell exactly what is knocking until you pull it apart. Could be a rod, craked piston etc.. You will start losing oil pressure if it is a rod.
My suggestion on an engine that old is to to do a complete rebuild and not cut corners. You will need to have the crank machined, rods etc. If the block is scored or the cylinders are out of round then the block will need to be bored and have oversized pistons and rings put in.A scored block does not affect the crank or camshafts...most likely the cams will be ok.
If you are going to turbocharge it build it strong with forged pistons.
You should have the valves ground and the head checked for straightness as well.
This is a very short synopsis and there is a lot involved....I wouldn't think $2,000 would cover a good rebuild.
you will need ...crankshaft, rods? pistons? rings, an engine gasket set, cam bearings, main bearings, rod bearings, oil pump, water pump, hoses, belts, plugs...just to name a few. There are also many special tools involved and the expertise to use them. Not a job you should tackle without some good help.
My neighbor just pulled his Porshe engine apart and doesn't know which cam followers cam out of which hole...is not sure which rod cap goes with which rods...doesn't remember which way the pistons go etc. etc. Not trying to discourage you, but there are alot of details any engine builder will know automatically....take your time and ask questions if you are not sure. A good book is a must.
Hope this at least points you in the right direction