[thstone]

Putting $2,000 (new IMSB + labor) into an engine that already has metal in the oil is big risk. The engine might last for a week or a year; its impossible to know for sure. That's a big bet without knowing the odds. How has your luck been so far this year?

Selling the car with metal in the engine oil now is slightly better than selling it with a blown engine - you might get $4000 if it can be driven.

The cheapest path forward right now is to do nothing and drive it until the engine dies. Might be a week or might be a year; its impossible to know for sure, but the cost is $0.

Once the engine fails, you have a few options;

1.a Sell the car as a roller with a failed engine. Car would be worth around $3,000.
1.b Parting out the car would certainly bring in more than $3K, but you'll have to spend a year pulling off parts, listing them, and shipping them. Its a huge PITA so I wouldn't recommend that route unless you like pain and agony as a hobby.
1.c Replace the failed engine with a salvage engine. Total cost: $3000 used engine + $2000 swap = $5K.