Malamang barado na nang sludge yan buong engine. There are small holes sa loob that oil should pass through. It's best to completely disassemble the engine and assess what needs to be done and replace if any. That's the only way you could really know what kind of work should be done and the cost that goes with it so that you can decide what to do. A surplus engine is already used. It's better to repair your original engine unless you plan to go 1.8 or 2.0 and spend a bit more as there are parts that are also needed to recondition a surplus engine. Will cost more but the upgrade is worth it. Kung same 1.6 lang din i'd rather use my old engine unless yun bore na nya ang may tama and needs to put in liners.