Volvo Repair: Misdiagnosis, refound, volunteer work

Question
Firstly, I wish to commend you for your volunteer work on this site. It is much appreciated.  My question isnt a technical question nor is it about Volvos.  I just need an opinion from an experienced mechanic on my dilemma.    

To make a long story short, I brought my 1998 boxster in because of a " Flashing Check Engine Light" and stalling engine.  The Mechanic was speculating that it was a bad coil, but wasnt sure.  He replaced the coil at a cost of $700.    

THIS REPAIR DID NOT SOLVE THE PROBLEM! Now he says the car is unrepairable because there is actually serious damage to the engine and that it needs a replacement motor.

The problem is, he replaced the coils and now I have to pay $700 for a repair that did NOTHING to fix my car!  

Am I completely responsible to pay for the repair on the coil considering it didnt solve the problem??

Any other advice for preventing this from reoccuring in the future?  

Answer
first  most cars if the check engine light is flashing the car misfires not running on all cylinder  now to your question  if the mechanic was right i cant tell you i don't know how he approached the car problem for misfire you check first spark plugs ,coils ,compression ,most the time coils go bad but if the car was still running bad after replacement the coils than that was not the problem he can take the coil out and give it back to dealer he my not get full refound but im sure he can take it back coils if you did not drive the car for long time  .next time for any car go to dealer let them  diagnose if is to expensive for you there buy all the parts and take it to your mechanic and just tell him install this parts .you maybe have problem with ignition or fuel  or compression  take it to dealer for second opinion .