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I had a similar problem with my 986S. It was the lifters. Had them replaced and the same problem occurred within a month. My mechanic tore down the engine a second time and found the same issue. Porsche covered the cost as the lifters were under warranty. Unfortunately it returned a third time. Turns out after much research and talking to porsche in Germany there is an "unofficial" explanation that some of the M96 engines had a problem with oil aeration in the area of the lifters which cause them to knock and eventually fail. They won't admit to a defect but it is known to happen with more than a handful of engines. My final solution was to sell it and by a 2006 Boxster S.
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