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Grinding is never good, neither is knocking.
Is the thing sticking out you are talking about the oil pan gasket? First I would run a compression test, then drain the oil and cut apart the filter to look for metal. It sounds like you are dropping the pan anyway, so take a good look while you are in there.
If the engine did sit that long without starting, there is probably quite a bit of dry metal. Dry bearings = bad news.
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