Knocking in the engine is usuallyeither bad timing, bad spark plugs, bad fuel pump, filter, or injectors, or all of the above. It also causes loss of acceleration, the engine crapping out, no power, and jumping. Fix for all of those combined is usually 1200 or less.
Gasket leaks are a major thing, it can cause severe damage to the engine later for a multitude of reasons, but only after some time, and there are dead giveaways to that (thick white smoke or black smoke in the exhaust, check your radiator and make sure there is no oil in there, or coolant in the oil etc…) If the engine is that damaged, get a new car, same goes for the transmission, most places will not rebuild for you but suggest another, and it will never (highly unlikely) work the same as the original, not to mention way to expensive, not worth the time and money. Another reason to get a new car.
Methinks they are trying to skin you here. It seems as if they are replacing heavily worn stuff(this is fine, if you asked for it), instead of the actual culprit, which is likely the fuel delivery system, in my opinion of course.
I had a similar situation with my car, at about 98K on it. Loss of power all the time, engine crapping out, I had the fuel pump replaced, and I personally cleaned and regapped my spark plugs, replaced one fuel injector, That cost me just under 500 and the car is at 111K now with no problems. Its a 2002. I also had a leaking power steering system, it cost me less than $20 to fix that myself, took ten minutes.
The “oil leaking into the spark plugs” thing is a mystery. That makes absolutely no sense, Oil cannot leak into them, nor the sockets where they are housed. Maybe somehow sprayed, but i don’t believe that. Depends on the model though, I’m just pretty good with Chevy’s. Oil usually sits at the lower part of the engine, flung around a bit inside too, but spark plugs are either on the top or top/side AFAIK. The only way that could happen is if some gaskets were improperly place, and if they replaced them or didn’t check at all, the mechanic sucks.