Hopefully it is not to bad.

 

Here is the vid... the knock sounds like the right side and a higher pitched spinning noise on the left...

http://www.youtube.com/watch?v=S62gnhj4rb8

 

Sounds like the lifters are bleeding too much or starving. The knock sounds like a bearing going out. Just because the knock is coming from the top does not mean that the bearing is not going out (metal vibration causes noise at both ends). The engine needs to be pulled and rebuilt. My .02

 

Im not exactly sure where the sound is coming from yet. I have a pipe and a long screw driver so I am going to see if I can listen for the sound. I may also have a mechanic listen to the engine. Its fairly loud when cold...