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Well, if the engine had too much oil in it my suspicion would be that the excess fuel dumped by the bad injector slipped past the rings and flooded the case. Even carbureted cars do that when the inlet valve needle hangs up. Actually changing the oil before starting the engine in a case like this is normal procedure. What, have they got someone from the wash rack working on your car?
Did they ever have the engine running beforehand? I believe you said you had the car towed in? If they heard it running (and not knocking) when you brought it in I'd be all over their butts, bud. I agree to let it continue running while knocking was absurd.
From what you're telling us it sounds like you're becoming a victim. Stand up for yourself, it's going to come down to your money or theirs. I'd start out by insisting a different mechanic do the diagnosis. Once they have made their diagnosis go there and have them show you their findings. Take a knowledgable friend, if possible - two heads are better than one.
Unless you know that the engine was making the noise before going to the dealer I'd be shooting for them to pay for the repairs beyond the injector. I'd also want a free loaner (it doesn't cost them a thing to loan you a trade-in, especially if you hint that you see something that you might consider trading the SVX in for...)
Beav
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