G'day Jimbob
That looks like the classic signs of a blocked oil gallery in the crankshaft on that journaljust for your own satisfaction I would try to poke a small screwdriver/drill bit up the crank oil hole and see what comes out,my bet would be small bits of bearing, which over time has blocked the oil gallery to the point of starving the bearing of oil lucky that it just rattled and did not seize/grab the shaft
check the underside,(cap side) of the bearing and you will see the bearing size stamped on it,STD,010,020, then if you were to repair the motor you have a rough idea as to what next undersize you will have to get it reground to
If you are going down the 200TDI route I would suggest that would be your best option cost wise if you are sure the TDI is good, but you may have to swap the Ser 3 6cylinder bellhousing for a 4 cylinder one,(bolts are in different locations at the top) this should not be hard to source as there should be quite a few dead 4cyl S3 gearboxes around to scrounge a bellhousing fromjust make sure that the throwout fork is good as it is a known wear problem,same as on the later vehicles,Leyland was of the opinion that it sold spare parts
cheers


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just for your own satisfaction I would try to poke a small screwdriver/drill bit up the crank oil hole and see what comes out,my bet would be small bits of bearing, which over time has blocked the oil gallery to the point of starving the bearing of oil lucky that it just rattled and did not seize/grab the shaft
check the underside,(cap side) of the bearing and you will see the bearing size stamped on it,STD,010,020, then if you were to repair the motor you have a rough idea as to what next undersize you will have to get it reground to 

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