BOB - A "New" Kohler K-series really isn't avail. anymore. There are rebuilt engines available from some sellers on popular auction sites but you never REALLY know what you get with them I suspect. There also are a couple places that specialize in "re-power kits" for small engine powered equip. but I've never really ever heard of anyone putting a newer engine in a CC to replace a Kohler K-series.
A K301 (12 hp) Kohler from any prior CC should fit in your 128. The next models newer (the 1200/1250/1282) had lots of changes and that makes them too hard to swap IMHO.
If your CC has the frt PTO installed, check to see if it has the anti-rattle clips installed. The pto pulley & fiber disc rattling back & forth sounds exactly like a rod knock. Maybe engage & disengage the PTO several times with the engine running but no belt on the pulley to see if the knock changes and/or goes away.
If the knock persists, I would drain the engine oil, pull the engine, flip it over, pull the oil pan and inspect the lower end of the engine. See if the rod is loose on the crankshaft, or the camshaft has excessive end play, or the balance gears (if they're there) are loose on their stub shafts.
There's really not much to these old Kohler K-series, but there are several places things can sound like a loose rod bearing. The actual bearing surface on the rod is a plated or coated material applied to the actual diecast conn. rod, there's no actual replacable bearing insert like on most other engines so the whole rod has to be replaced. Undersized rods are available from Kohler and the aftermarkey, but it's good practice to grind the rod journal on the crankshaft before installing an undersize rod. The clearance tolerance is VERY tight.
A complete rebuild with OEM parts, O/S piston, rings, new rod, all gaskets & seals, new exh. valve, with boring/honing & valve grinding done by a competent local shop, and assembled by YOU should run in the area of $400-$500. If you use good aftermarket parts, the total could be about $100 less. I left a little "Cushion" in those totals for new plug, plug wire, points & condensor, carb rebuild kit, and maybe a points pushrod.
If your engine seems to run O-K, doesn't smoke, and runs smooth, no missing or surging, I suspect you'll find the PTO clutch is the source of the knock and speaking from personal experience, they can knock for THOUSANDS of operating hours.
