2008 Honda Element Engine Knock

2008 Honda Element
2.4L AT AWD
153,481 miles

This is(was) our daughter’s daily driver and we are trying to determine if the engine knock is coming from the cylinder head or the block so that she can decide how to repair it: either a rebuilt head or a complete engine swap from a salvage yard. She has been driving it like this for about six months, but parked it when it recently started knocking while driving…before that time the knock was audible at idle only. Since the problem began the loud knocking noise could/can only be heard after about one minute from cold start (0:53 on this video). Also, it burns(absolutely no external leaks) about ½ quart of oil every 550 miles. Any ideas would be appreciated. Below are the results of compression and leak down tests:

Dry Compression:
#1 155
#2 164
#3 181
#4 141
Wet Compression:
#1 200
#2 196
#3 205
#4 196

Factory Service Manual Compression Test Parameters:
Minimum 35 psi
Maximum variation between cylinders 28psi

Leak Down:
#1 12%
#2 8%
#3 12%
#4 16% Air escapes from oil filler cap and a slight hiss from #3