Just bought a 2000 Jeep Cherokee Sport for $800 knowing that there was some engine problems. The seller said that there was coolant in the oil. He didnt have the time or space to work on it. I picked it up and look at the valves and they all seemed like they were fine. Added some oil to it with a new filter to hear for the any problems. The jeep start up right away with no check engine light and oil pressure was one dash above 40. Originally I thought that it could just have blown a gasket but when listen to the engine run there is a knocking coming from it. Anyone know what the problem might be? Dont know it could have been a rod bearing worn out or cracked head.

 

Just because it is a thing with the 0331 heads in the '00's and '01's I would think cracked head.
And if it has been run like that for awhile it will trash things in the lower end.

 

What do you recommend I do, replace the engine with a used one or try and rebuild it?

 

That is the question.
What would a used running motor go for in your area?
Also be aware that it is a '00. First year with the 0331 head, dual exhaust manifolds, no distributor, etc.
The only engines that would be plug and play would be an '00 or '01.
Problem with is you are still dealing with the 0331 head.
Other engines can be used but requires swapping over some stuff. So not exactly plug and play.
Pull the head and get it checked? I don't think I would waste my time or money.
Probably better off getting a Clearwater head.
Pull the oil pan and check the lower end. Maybe give you an idea of where the engine is at.
Basically you are going to try and get handle on what exactly is wrong first and go from there.
Check tolerances and whatnot

 

Engines around me are usually around $500-$600, most of them have a transmission with them but the transmission in my jeep is solid doesnt slip or anything. Haven't really had time to really do an internal check on it yet.

 

You need to start educating yourself on the 0331 head.
Plenty of info with at Google search.
Need to find what engines you can use.
Plenty of posts about that.
Best case scenario is your existing lower end with a new Clearwater Head but...........
Just out of curiosity.Is the '00 a Federal Emissions or CA Emissions one?

 

I'm pretty sure it is a federal emission. I'll have to take a look at the inside of it to see the internal damage.

 

Where are you located?

The engine is trashed. Dink with it if you want to satisfy your curiosity, but it's a waste of time. Either rebuild it or replace it with a good used one or a reman one.

 

I'm located in Michigan. I just found a used engine that I'll be picking up tomorrow.

 

Good.