Rebuild old one or purchase different used car

Which is the more viable option: purchase a used motor for the pre-owned Focus that I currently own or invest in another very economical used car? All was well until I had the oil "topped-off" at a name brand oil chain shop. Shortly thereafter, (while driving)the engine went clankity clankity (very loudly) & immediately shut off. I was later told that:1)one of the cylinders may be damaged & 2)there is about 1 qt. Too much oil showing on the dipstick & water in the engine oil; also, I was told a new motor will be $1100-$1400+; is that about right? (Although I realize that there are no guarantees w/either decision, I'm on a (very limited) income and attempting to make the best possible decision.
Thanks guys.