I agree with V10DoubleTow about rebuilding yourself. If you can do it, you're way better off. Mine did the very same thing in January (99' 86,000miles). One cold morning it just starded knocking like a big-dog. There was no way I could rebuild it myself and the shop estimated the fix at $3000. I opted to go with a motorcraft reman engine with 3yr/36k warranty....$5000 installed.

Ford was the only place I found that would even talk about rebuilding. I probably talked to 10 independent shops that wouldn't touch it.

Good Luck!