hey guys,

Little help.. my 350 mercruiser is knocking. Tried pulling each spark plug wire from the distributor to figure out if and which cylinder was causing the problem. Engine kept on knocking.

Here's a video of the sound.

Can anyone tell me where to look and how to fix this?

http://www.youtube.com/watch?v=VaDmeNrxidY

start with compression test

I'd use a stethoscope or large pry bar cupped to the ear. Either way, it's coming out. What color are the flakes in the oil? Copper - rod bearing. Aluminum- Piston issue. Seems to deep of a sound to be valve train related.

Maybe a stuck lifter?
If it was a rod bearing it should have got quiet when you pulled the plug wire (or the 2 wires for a particular main bearing). Hows the oil pressure?
One time I started a 350 not knowing there was water in a cylinder, it hydrolocked bending a rod which caused the piston skirt to hit the crankcounter weight, also sound like that.
Just some other ideas

Stuck lifter- nope wouldn't make that sound.
Rod Bearing- of course it would still make that noise. Not under load, it's just flopping around. This isn't a car in gear.
Bent rod- you had water in the oil and still ran the engine?

Dude, pull the engine and stop making it worse.

Its sounds like its in the lower end, so the engine will have to come out. That is too loud of a knock for the valve train.

Stop running it and pull the engine.

Typical winter time OSO, jumping all over someone with a simple response. The water was in a cylinder from a leaking head gasket, no water in the oil at that point(never said water in the oil either). Usually a rod bearing will get quieter when you pull that cylinder plug wire, maybe not completly go away.
Proceed to bash away.......

Ditto.. .by continuing to run it and listening to noise ...potential for catastrophic failure rises...

Pull it out, I agree that is not valvetrain noise. Slight chance it is loose coupler bolts or maybe even a really bad u joint in the drive but chances are bearings are hammered.

Sounds like piston slap or a rod bearing. Like it was said above, it's time to pull her out.