I just bought me first samurai, a '88 (carb) with 88,000 orginal miles, none of which were maintained properly. The stock 1.3L engine makes a very rythmic knocking sound (like a VW diesel) when it is cold and under load (normal driving or reving up). It is quiet when idling and also relatively quiet when it warms up (very faint knocking sound).

I have checked the timing, performed a major tune-up (plugs, wires, dist. cap, rotor, valve adjustment, oil change with engine flush). It still makes the noise. Rods usually knock whether the vehicle is cold or hot and even while idling. Plus this sound is even across the motor (it doesn't sound as if it is coming from just one cylinder). Any of you guys ever experienced this?

I only paid $500 and don't want to put a lot into it if the engine is about to go.

Thanks in advance for the advise.

Probably have a rod bearing or crank bearing causing the knocking. When the oil gets hot and thins out, it flows better so the knocking gets quieter. I just did a total overhaul of mine (pistons, rings, bearings) and it cost me around $500 for parts and machine work. Good luck.

If it is a deep knock, rebuild it. If it is a higher pitched pinging then reset the valves.
Valves are easy after the first time.
If you are balancing the cost of a rebuild against the cost of a junkyard replacement, they are about the same, but then you are putting in another 20 year old engine... which you will have to rebuild anyway. Better to just get it done before something makes a picture window in the side of the block.