possible cracked block or blown head gasket,,or cracked head...they will run just fine with heater hoses bypassed or blocked off,,.mabey cracked head,,thumping is more troubling,,sounds like a rod bearing,,a lose bearing will be quiet until the oil warms up and cant take up the extra clearance anymore,,id think about a rebuilt or good used engin..overheated like that usually if no other problems arise they will burn oil from there on because the excess heat takes the temper out of the rings,,and warps the surfaces and cylinders..heres your chance for a 360,,,,,rick,,,