Hi..there..Just noticed that your question hadnt been answered..so will try and help best i can if you still require help..
- Had a new timing chain been fitted before the oil light issue?
- What kind of "bits" had been found in the sump do you know?
- Whats the mileage?
Ok.. by the sounds of it and what you describe..its certainly sounds like a new engine is required as wear damage could already be done internally..so of course obviously another engine .be it secondhand / reconditioned etc might be the best way forward in this situation.subject to the garage who fitting another enigne check it properly before installation..givin the fact as the car stands now you wouldn't get much as per trade in..so you would need to weigh up what the garage are quoting you on an engine replacement plus fluids..over the costs of another second hand car..if the one you have now is fixed then it may give a better return to use as a trade in...