[J-Rod]

Could be a head gasket. And if it's been run too much like that, it could make the motor have some bad sounds. My friend bought a 900 with a bad HG that killed the motor. Sounded about like yours does before we pulled the motor out and put a new one in...

I think you need a new motor...that's a loud knock.

 

[J-Rod]

That crossed my mind, wouldn't that show some pretty noticeable loss in compression in at least one cylinder though?

Would there be a pretty distinct sign on one or more of the sparkplug(s)?

Not really sure to be honest, but what does the oil look like? Milky brown?

Also, a turbo would be more of bluish white smoke. That's white white smoke, and there is smoke coming from the oil filler cap, not a sign of a turbo failure.

 

[J-Rod]

I think you can only use the 2.0 from 2000-2002 since older cars have the T5 engine management and yours has T7.

 

[J-Rod]

I always thought the wiring harness was different between T5 and T7, and that the ECU was as well. When we put a motor in my friends '98 I was told only to get a T5 (B204) motor form '94-'98.

Baldsaab, did you have to rewire it?

 

[J-Rod]

If oil starved, you could have several premature wear related issues. Check everything. No to the V6, that's a 9-5 engine. Too much trouble for nothing in return.

You're forgetting the 2.5 N/A V6 you could get in some 900's.

And it's really not worth the trouble...