The car is a 1997 850 non-turbo, automatic with a 20v 5 banger.

I got this previously non-running 850 to start by running 3 new brown/black wires from pin A18 on the ECM to the CMP, CLT and TPS sensors. Something was shorting these 3 and burned out pin 18 on the ECM. It started right up, but the top end was a bit noisy. It hasn't been run in 3 months or so. A little seafoam quited up the top end.

After being warmed up it started to make a sort of knocking sound. I recorded a video of the sound. It isn't the best quality in the world, but you can hear the sound. Anyone know what this is? I hope it's not a sound that requires a whole new engine, though I fear the worst. It doesn't make any other bad sounds and it runs very smoothly. This particular sound doesn't go away when you pull any of the spark plugs. The engine has oil.

video can be found here- 1.8mb
http://www.cramptonstation.com/850engine

That sounds like a piston slap to me. Get a compression test to verify, also check the oil pressure... the oil pickup O ring may no longer work. There are piston oilers in the 1997 model and lack of oil pressure may be a problem.

Klaus
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The 164 has a new home, all I am left with are a 95 854T and a 98 V70R :)

When I had a spark plug boot off I noticed sparks starting to attempt to jump through the boots on the distributor. Inside the distributor there are white lines which could indicate that spark is jumping around in a way it shouldn't. Could spark occurring in a cylinder when it shouldn't be cause this sorta noise?

Well, that makes a lot of sense!!! A knock that cannot be suppressed by the knock sensor. Time to get a new cap/rotor :)

I love it when people find their own fixes to a difficult to diagnose problem and then report back here. Others can now learn from that.

Thank you,

Klaus
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The 164 has a new home, all I am left with are a 95 854T and a 98 V70R :)

No luck. It still makes the sound. Spark is still jumping around the dizzy if you pull a boot off a spark plug. I think the sound is coming from the front of the motor around cylinder 1. I think it's more from the top end than bottom end, but I can't be sure. It gets worse when the engine is warmed up.

Darn, just lost the whole message! Edit to try again.

There should not be ANY arcing at the rotor/cap. Are the cap/rotor/wires new Bosh or OEM? Check the rotor stem for play, there could be a bad bushing.
Ensure the correct firing order of your wires, starting at 7 o'clock - 1-2-4-5-3.

Klaus