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You are on the right track for something blocking oil circulation probably, that would be my guess as well (still just a guess). Im glad the dealer is willing to let you fight the decision but I would just like to point out, that a fully built engine would cost less than that engine replacement. Heck, including a brand new block with forged internals can be had for that price, so I dont know whats up with that, I wouldn't pay $10k for a used engine, or $12k for a new one. You said you planned to go down the turbo or SC route later, why not go ahead and build it? Dont feel tied to the dealer for the $1k they charged you for dismounting it. You will loose a lot more if you decided to go ahead and shell out $12k for a new engine.
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