How much should a replacement engine cost for this model

Oil engine light was on for about two weeks. Two mechanics inspected it, no other symptoms appeared; car was running normally. Oil was full. No clear diagnosis was given but we were OKd to keep driving car.

About 1 week later, engine began making terrible noises, oil light on again. Something serious is now happening.

Car was towed to mechanic #2 (who I have known for 30 years, and is honest and competent). They are now saying engine is shot. Too costly to take apart and try to diagnose specific problem as that could take up to 20 hours of labor.

Choice are car is now salvage and not fixable, or get replacement engine. Prices quoted on replacment engine was either $6000 or $ 8000. I don't get understand the difference between the 2 choices, but I believe the $6000 engine was rebuilt with an 18 month warranty; $8000 is not new but closer to new and better quality with a 3 year, 100,000 mile warranty.

Both of these seem quite expensive. Are there less expensive choices.

How reliable are rebuilt engines and/or replacment engines. Have never dealt with one before.

Is there anything else that should be considered in this car regarding repair.

One more fact. Car was bought used about 5 years ago at 78,000 miles. We have owned it since. About two years ago it had a serious smoke problem on start up. Current mechanic took apart engine and found lots of sludge and hard pieces of caked up oil. They removed as much as they could. Smoke problem ended, car ran fine.

They currently believe that sludge problem is likely at the root of current oil pressure problem; that a piece of caked up sludge is fowling up the works.

Thanks much for your thoughts.

Richard Kleiner