(quoted from post at 21:14:49 04/07/15) Burns Oil as in Smokes or Just Losing and having to add it regularly?
If its smoking, it probably means a new set of rings at a minimum. Boring and Sleeving the Engine with new Pistons and Rings at the worst. You can do a compression test to start, before you tear into anything.
If its not smoking and just leaking, is it finding its way into the radiator? that would be a blown head gasket.
If its not smoking and just leaking, is it dripping from the cotter pin hole in the bell housing? If so, then that's most likely a rear main seal, and possibly rear main bearing.
Knocking can be a lot of things, my 64 4000 had a side suction oil pump, and you could see where the crank counterweight had beat on it over the years, I know the 8N guys can tell you this noise sounds like a hammer even though its a small tube.
Could also be the pump suction broke off and floating around in the pan, if its just the end of the suction you would still get oil to the pump as long as there was plenty of oil in the tractor, and since you say it burns a lot, I'm assuming you keep it full to a tad overfull because of that.
Could be a rod bearing, but you say its been like that for a long time, in my short experience rod bearings don't give you years of knock before they show themselves big time.
Also, some have described a cracked exhaust manifold leak to sound like a knock in the engine... have never heard that one personally, but seen it described here on the forum as a knocking sound.
I know that doesn't narrow it down.... if you do the work yourself an engine rebuild should not cost anywhere near $3500, the only machine work would be to bore the block for the sleeves if necessary, and possibly to plane the head if its warped.
If you do pull the head, watch the oil tube that runs from the cam up to oil the rocker arms, that lil tube is made from unobtainium, that lil tube is over $100 to replace.
Also you didn't mention if it was Gas or Diesel?