Should I put new engine in my car?

If you like the car you can get your money's worth by keeping it and putting some miles on it. Or you could install a good used engine which is of course a bit of a crap shoot.

Selling it the way it is will net you less than a grand,

Save yourself a little money and get a decent used engine with roughly the same amount of mileage. You will find some good, reputable parts dealers that will find you a great deal, especially compared to that price! I'm sure you can even get a very good warranty that will keep your mind at ease. Also; I think you should ask for an engine that has always run synthetic oil, and continue to do so as the protection of a good synthetic is so far beyond conventional oil that it's not even in the same oil universe, (in my opinion). Good luck, and i,m sorry you had to deal w/all that; never a good time. Scrapping it should never be an option. Take care.

it happened to me too, in my case it was a spun rod bearing, i opened the engine from below, sanded the crankshaft a bit, cleaned the inside, changed the rod bearings, oil etc, and it´s been running since.