5.3 engine loud tick/ knock

Yes I have heard about the o-ring ordeal. You took care of that motor, just need to fix a flaw, before adjusting the rocker arms. A little oil flow across the rocker arms is normal. One other thing that has nothing to do with the engines actual oil pressure, Is you may be getting false readings from the gauge. GM had put a fine screen type basket under the oil pressure unit that gets gummed up. The oil pressure sending unit needs to be taken out and that screen fished out and cleaned. Then the gauge will be more accurate.

If you go to the oil pump pick-up I would replace the oil pump with a high volume pump since you are there. Before doing any of this I would check the oil pressure with a mechanical gauge to help in determining the condition of the engine.

After replacing the o ring and it still taps try adding some Lucas Engine Oil Stabilizer to oil. Had a friend that had a tap in his engine added stabilizer and let idle in about 45 minutes the tap was gone. Not saying it is going to work for you but it is worth a try.

I've had a Gen III 5.3 in my old Tahoe (240,000 miles) and now a Gen IV 5.3 in my Suburban (181,000 miles). The tick is apparently pretty common on these as the age. That said, I just experienced the knocking (accompanied by CEL, Stabilitrak and traction control warning) which led to my replacing all the lifters (I kept it stock with AFM still working). I found that the #6 cylinder's intake lifter completely collapsed. That said, the cam was OK so I didn't do an AFM delete kit but I did replace all the lifters. With new lifters, it is silky smooth and quiet. Just the lifters (head gasket kit) and related parts and supplies it is about a $1400 job, minus labor.

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Wow some people enjoy spending money. The ticking/knocking is from the DOD, displacement on demand. the computer is telling the solenoids to in # 1-4-6 or 7 to collapse the lifter. I is usually the intake that sticks. If you get a 300 code for one of those cylinders, then chances are you should do a lifter "release process" and delete the DOD through the computer. It is a process good mechanics know how. If yours says, da? then move on..