Listen to
@the 18th letter this is a good, cheap, option. Aka: the Tennessee Tune-up as well. LOL
1. Change the oil and filter
2. Add approximately 1/2 quuart of Sea Foam, MMO, or ATF (Ratio is on the cans of Seafoam and MMO).
3. Let engine idle with new mixture until it gets warm
4. Run in neutral at rpms of about 1200 to 1800 (think massaging the mixture into the system)
5. Take the truck out and do some moderate pulls through the gears (not WOT).
6. Listen to the motor - is it quieter or noisier?
7. If it seems like improvement is being made, then give it some more rpm and longer pulls. Then coast for a bit and let the decell cycle pull oil up and around under vacuum.
8. Make a long run to Costco on the freeway. Buy more oil and filters
9. Let truck cool and sit overnight. Fire up in the morning and see if noise is gone. If gone, change oil and filter. If still slightly present, repeat the process and change the oil hot afterwards.
10. STOP using 0w-20 and go with 5w-30 Dexos.
This may or may not fix it depending on how bad the lifter issue is, but I'd be willing to bet it will work.
As far as the engine price, that's a major amount of suck, but seems common in this market. An independent shop may be a better option. They can still put in new GM engines with the warranty as well. 3yr/100k miles - done many over the years as an independent