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Any luck with the k-seal. I've tried 2 bottles in the last two days and all thats happened is a small leak has developed in the passenger footwell, so maybe not a head/ gasket failure, maybe just a blockage/ airlock or maybe something REALLY serious
do you have sufficient clean oil and not watered down oil in the engine, as this will give you knocking,
do you give it regular oil + filter changes, and is the oil dirty black and grainy or clean?? do you use a cheaper oil or a more expensive oil?? im only asking as we use a cheaper oil at work and the diesels tend to become black and grainy and knock more, i used to used a cheaper one in my 200 and i used to have to change the oil every few thousand miles as i would loose performance and it would get noisy then i found Castrol Magnatex 15/40 diesel and it would last 12000 + miles before getting dirty and noisy
Sounds to me like you may have solved it! If there was a hole before that was causing the problem you might have fixed it (only from my limited recent experience)