4.0 Auto, 125,000 miles. Runs and drives great.
I'll start wih the worst:
It sounds like a low end knock, it gets quiter as the engine warms but you can still hear it, Gets quiter as the RPM's go up. laying under it, it sounds like it is coming from the front of the engine, somewhere around the first two Cylinders. Some have told me this is a normal sound for a 4.0 but I don't think so.
I think the previous owner over heated it because the water pump is new and the Overflow tank had lots of brown what looked like Poop in it, not mud, it sticks together and has an oily feeling to it and some metalic color to it, so I'm thiking Radiator sealer, Anyway I cleaned it all out and am in the process of flushing the system.
So what should I do ?

Radiator Poop:

 

It's normal for the overflow tanks in these to look like crap. I flushed mine before Winter and again this Spring and it was already looking like crap, but it was nothing like it was the first time I did it. I had to scrap the overflow tank out the stuff was so thick.

It's hard to diagnose a knock over the net. Maybe you could post up a video. Have you changed the oil yet? I'd do that to see if it gets worse. The previous owner could have put some gear oil in the crankcase to quiet down a rod knock.

 

Goop in overflow is definatley something added.
I just changed oil and yes it seems alittle worse, however the oil that came out wasthin as water.
Just checked my Torque Convertor bolts and Flex Plate, all is fine.
The Knock sounds right up front, maybe from the first Cyl.
It gets quiter as I raise the RPM's.

 

Very Weird:
I drove to town, only 1 mile away.
Have a freind listen to it, so we listen and discuss what it could be.
As we are talking a freind says Hey; It Ain't making noise any more.
Very Odd.
Also took a drive tonight for about 1.5 hours, no noise.
I'm thinking oil Pump

 

Your old oil didn't have a gas smell to it did it? After changing the exaust on my 97 it started tapping from running to lean. added about a quort of gas to the oil and it was VERY thin. Changed the oil and plugged in the(forgotten) sensor to the Cat and all is better.

 

My first reply apparently got lost somewhere so... The 4.0 knocking noise issue is a long story but should not apply to your 97. The thin oil may be someone's attempt to cover up a piston slap problem. More likely, look for an exhaust leak. A cracked exhaust manifold or broken exhaust manifold bolt will cause a leak that will make a knocking noise. The noise goes away as things warm up and expand shutting off the leak. Look for black carbon marks on the exhaust manifold as evidence of a leak. Also, with the engine cold, pressurizing the exhaust system thru the tailpipe with a shop vac in blower mode and using a soap bubble solution around the exhaust manifold is a good way to find a leak.

 

No Exaust leaks.

When I start it up, it has what sounds like a Low end Knock, it gets quiter when bringing the RPM's up.
When engine warms to operating Temp 190-200 degrees the knock goes away.
At start up I have 40lb. + oil pressure, after reaching operating Temp I have 20lb. +- Oil pressure
This morning with the engine cold after setting all night, I removed the Valve cover, started the engine and it took about 15-20 seconds before oil made it to the Rockers, and it does not squirt out of the rods, it just ozz's slowly over the Rockers.

 

Check your oil pressure with a mechanical guage. The stock guage/sender is many times inaccurate. With the numbers you gave, oil should be shooting out, not oozing out.