There are two parts to the oil pressure reading system. One is the guage and the other is the sending unit. The guage of course that thing in the dash that says oil pressure, but the sending unit is screwed into the block and has a wire on it that sends the pressure amount to the guage. Replace the sending unit, any parts store, and then check your pressure reading.
As for the knock, well like was said before, you may have a rod knocking, especially if your oil pressure really IS low. That means rebuild and much more than $1000.00. The knock sensors for the car are much cheaper and can be replaced easily, well the front one anyway, The rear one is a bitch, but can be replaced with patience and a lot of swearing. I did them on my turbo without removing the starter or the intake. But all that should cost well UNDER $1000.00 even if you buy new knock sensors from the dealer and have them install them. So get a second opinion about the knock before spending the money.
Let us know.
Russ
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