possible severe engine damage - would appreciate diagnostic advice

[Topless]

Your plan looks good. Inspect the oil, coolant, spark plugs, and oil filter. If no grenade fragments:

1. Broken valve spring
2. Water pump sheared
3. What else??

[Jaxonalden]

Reading what you wrote and not having an audio clip, this is my $.02;

1. The smoke at start-up is normal.
2. The burning smell...stray cat?
3. Clatter sound, do you have a mechanic's stethoscope? Looks like a doctors but has a rod on the end. If you can get your hands on one...start the car, crawl underneath and start probing to isolate where the sound is coming from. I'm hoping its the water pump impeller coming apart (water temp never climbed above average?).
4. The fact that you drove it and it still idled fine doesn't sound like something terminal. You might want to pull the front access cover and check your pulleys and the water pump at the same time.

Good luck and please let us know what you find. If you find a mechanic is going to break if off in your backside with an outrageous cost, have him prove whats wrong first.

[Gator Bite]

You may be catching the beginning of an IMS bearing failure. Many people who've had that happen describe the sound as a clattering, like if you filled a coffee can with heavy bolts and shook it violently. If this is what you're hearing, don't even think of starting that engine again.

If you can catch an IMS bearing failure early, the engine can be fixed. If the intermediate shaft breaks, the engine is almost always toast.

[BYprodriver]

I would call the dealership that installed the "new" engine & see what they say but I would not mention restarting the car the 2nd time. What alarms me is the smell you spoke of. When the IMS bearing seals allow oil to pass thru the seal to the bearing it washes away the "permanant" grease & the oil stays in the IMS tube & since this oil stays in the IMS tube when it gets old it smells very strong. My guess is your engine has jumped cam timing & may be hitting pistons on valves since it did not want to start like it normally does. Thanks for your great summary of what happened & a speedy recovery.