It's obvious your motor is toast. Weigh your options though. A reman motor is
$2.5K with installation.(Consider a used motor?) What would it cost to replace
with something comparable.? How is the rest of the car? I would have recommended
Crown Vic as a replacement but you shot me down ;)
Get some input from the www.lincolnsonline.com Towncar forum before you 86
You may decide to keep it. It is hard to find a replacement today.
Regards, Tom (lucky 84 MK VII owner) Adkins