All Small Six Help! Did I just screw up my new build?

[WillingnessLimp]

I know I screwed up somewhere in the process and want to understand which of my actions lead to this failure.

So a little backstory. I pulled my engine while I was doing T5 conversion and decided to go through rebuild. Machined the block and head, hot tanked, cleaned, pistons are .020 over, milled the head and decked the block a bit to compensate for felPro gasket, Clay Smith Cam (H-267-8-B), new springs, cleaned and refreshed rocker arm, DUI distributor, dual headers, weber 38/38.
That was my first engine to assemble, but did most of it myself (machine shop put the block with pistons together).
Fast forward couple of months working on it here-there and I was doing my first start at the end of last year.
It started, I think timing was off for sure, but I got it running to break in the cam.
Then it sat for a month and I finally got to work on it recently.
It started, was idling (a bit high, at about 900 rpm), but seemed okay.
So I drove it around neighborhood for 10 min and the next day drove it for about 10 miles to finish up the exhaust. On my way back I picked up timing light to dial it in.
To my surprise, the timing was completely off, I mean, it was way retarted - about 10-12 degreed after TDC. Adjusted the timing (with vacuum disconnected) to be 10-12 degrees BTDC - car ran much better. With vacuum connected I was at about 20-22 degrees BTDC.
Couldn't get it to idle correctly - was at about 900-1000 rpm with idle screw backed off all the way and not touching anything. But thought I would figure it out as I go.
Picked up kids from school yesterday and dropped them off this morning on that set up (about another 12 miles total).
Later today was planning on doing a little longer drive (about 30 min one way) and wanted to take the car out. Everything was going well, but about halfway through the drive on the freeway I hear metal banging and had to pull over as soon as I could. Tried starting the car, but the banging/clanking sound made me to shut it off right away. At this point I'm on a freeway and can't really hear well where the noise was coming from - wasn't sure if something was wrong with transmission or driveshaft or anything else. No leaks tho. Towed car home and tried a quick start. The banging noise was definitely coming from the engine.
Also noticed a small oil leak from the rear of the engine, where it mates with bell housing.
I didn't have a chance to start taking it apart, but just assume the worst - my learning experience just cost me an engine job
Did I f*cked it up with timing at the beginning? Or anything else that could have been overlooked?

Not sure why, but first thing I've decided to pull spark plugs out lol. One of the spark plug wires came undone at the spark plug.
Also, per @awasson suggestion I put an oil catch can for PCV and during that short period of engine running, I think it accumulated quite a bit of oil.

Anyway, any tips, suggestions, jokes or phrases like "do a V8 swap at this point" will be taken in consideration
Gonna start with taking the head off first and then deciding what to do next, but probably will pull the engine out again and dive deeper.
I'll include video of the car running this morning - would be curious to know if it seemed okay.

 

[B RON CO]

Hi, I would put a socket on the balancer bolt and turn the engine a little both ways to see if you can detect anything. Before removing the head, I would spin the engine with the spark plugs removed, and see if you can figure out where the noise is coming from. Starter / flywheel, oil pan, valve cover? If that doesn't help, you will have to dig in deeper. Good luck

 

[DON]

You could check the oil for metal in it. That would tell you if it is inside the engine.
I couldn’t tell too much from the videos.
If it helps, I don’t think the late timing would have caused it. It usually causes a hot condition.
Sorry man!! Real bummer!!

 

[vssman]

Oil coming from the back of the engine - did you put sealant on the flywheel bolts? The holes in the crank are through holes exposed to oil. I’d start with checking that the flywheel is tight.

 

[drag-200stang]

I tried to search your posts to learn more about what you have done, but I am blocked.

 

[WillingnessLimp]

@B RON CO thank you! See, for some reason I didn’t even think of that yesterday!

@DON one video (3478) is it’s running in the morning, when all was fine. The other video (3482) is after I got the car towed back to my garage. There is knocking sound, but I shut off the engine almost right away

@vssman yes, I put sealant on the flywheel bolts. The oil sipping only appeared afterwards. I’ve been checking for any leaks after each start and each drive.

@drag-200stang here is the link for my intro post and some other questions I’ve been asking https://fordsix.com/threads/novice-here-mustang-64-5.88863/

 

[drag-200stang]

It could be a lot of things but on the second vid it sounds like it could be a lose flywheel but when driving at speed it will not make much noise but a a idle it will knock bad. Check under the valve cover to see if something is broken or off. Had something go down the carb. and it also sounded like that at all speeds. Did you get diesel in your gas some how.
Take you time finding the problem, do not take apart more than necessary to find.

 

[powerband]

start with checking what you did last ...

 

[awasson]

Man… I so sorry to hear that something is wrong with that engine. The first video sounds great. I don’t think this has anything to do with the retarded timing but I do think you might have a vacuum leak that is causing that high idle issue.

It sounds to me like the knock is coming from under the valve cover and not from the bottom end. I hope that is the case anyway. It seems to turn over quite nicely so I am a little more confident that the bottom end is ok. Have you removed the valve cover yet? That is where I would start. Check under the distributor cap too.

I wouldn’t be too worried about the oil in the catch can. You’ve got some ways to go yet before the rings are set and the blow by will settle down.

Crossing my fingers that it’s something loose under the valve cover or maybe lose flywheel or something like that.

 

[pmuller9]

It sounds to me like the knock is coming from under the valve cover and not from the bottom end. I hope that is the case anyway. It seems to turn over quite nicely so I am a little more confident that the bottom end is ok. Have you removed the valve cover yet? That is where I would start.

I agree with checking under the valve cover first.