It sounds like you had a diesel runaway, where the engine fuels itself on it's own engine oil.

Usually comes from the turbo, where the inlet side of the turbo oil seal fails.
Oil under pressure from the turbo bearing gets blown into the inlet, which is then burnt by the engine in the same way as fuel that has been injected.
The only way to save it is to stall the engine, or turn it off & hope the inlet anti-shudder valve does it's job.

By the sound of the knocking you report, the engine will be toast & need replacing, which probably won't be economic on a car of that age.