Toyota Repair: Engine Knock, piston damage, timing chain cover


Question
I purchased a 85 4Runner for my son. It had a new rebuilt engine purchased from PepBoys in it when we bought it. It ran perfectly, but soon developed an engine noise diagnosed as a head problem. We winter in Yuma & upon our return to Idaho we had the head pulled and it was fine. I had the engine pulled and we found piston damage in 1 hole and scarred cylinder. The engine was taken to a machine shop, it was slieved, bored, new pistons, bearings ect and the engine re-assembled. The enging knocked a little upon startup and got a lot worse during the next week. The enging would only knock for about 3-4 seconds until oil pressure was built up then stop. I returned the 4Runner to the shop, they returned my money (except for the machine work) and we returned to Arizona towing the 4Runner. I took the 4Runner to a shop here (in Yuma), they pulled the pan and found the crank shims in the bottom of the pan, one of them pretty chewed up. They pulled the engine had the crank reground, reshimmed, checked all the rods, bearings and reinstalled the engine. All the work didn't help one bit. Next they installed a new oil pump (the second one). The engine still knocked on start up, going away as soon as oil pressure built up, about 3-4 seconds. They told me to take the car and drive it until the engine either got worse or better, then bring it back. I took the car to another mechanic. He pulled the pan, main bearings and checked clearances with plasti-guage. Everything checked out fine. Next we pulled the head, pistons, rods, checked the wrist-pins. Everything looks good. The only thing we found on the top was the very front of the headgasket was mashed under the timing chain cover when it was installed (in Idaho), then sealed with forma-gasket. I am sure the mechanic didn't want to remove the head again and fix it when he found his mistake, and yes it leaked oil. This is about the end of my tale of woe. The engine runs fine after the oil pressure builds and the knocking stops. After running a long time and the engine is good and warm a small sound can be heard that may or may not be the same as at start-up, it certainly isn't one tenth as loud as upon startup. On one startup, just before the engine was pulled apart this last time, the engine cranked for about 10-15 seconds before it fired and there was no knock at all (obviously the oil pressure had built up). The engine is apart and I, we are at a total loss for a fix. The knock is loud enough that it turns heads in a parking lot when it first starts and is a little embarassing. Thanks in advance, I hope you can help.

Answer
The mechanic that checked the main bearings etc., also check the rod bearing clearances, I know you said main bearings but were the rod bearings checked, if not I think this is where your problem may be, most of the time when an engine is remanufactured the crankshaft is ground undersize requiring bearings to match, is it at all possible that the crankshaft rod jurnals are undersized but standard size bearings were installed? A knocking noise is always caused by too much oil clearance in the rod or main bearings/worn bearings or sometimes by worn pistons which have too much clearance but is always without exception either that or low oil pressure.
I find it kind of strange that those shims fell out of the thrust surfaces of the crankshaft and ended up in the oil pan, this normally reqires replacement of the crankshaft and possibly the engine block, I'm kind of curious how that was fixed, I have rebuilt and repaired many of these engines but there is something that just doesn't sound right here, let me know if I can help more but this is all I have with the information given.