The B-series engine is actually one of the sturdiest engines around and with the exception of general wear and tear on high mileage cars, the engine is not one of the cars weakest points.
If possible have the car started from cold so you can look for smoke on start up which is evidence of oil seal failure on the valve gear. This is not a serious problem but the cylinder head needs to be removed to correct this.
When the engine is running and up to temperature the noise from the top end of the engine is normal (B series engines can be a bit tappety) in fact if there is no noise then the rockers probably have been over tightened, perhaps to hide wear. But doing this will accelerate the wear in the valve gear.
Any rumbling from the bottom end, or block, means a worn crank and main bearings so walk away unless you are prepared to do an engine rebuild. A chattering timing chain is a sign of wear, but fortunately timing chains can be replaced fairly quickly, inexpensively and with the engine still in the car.
The presence of water in the oil is a sure sign of a blown head gasket and potentially a cracked or warped head.
Oil leaks are commonly found near the timing chain cover, gearbox bell housing cover, drain hole, and tappet side covers (it is nearly impossible to stop a B series engine from leaking oil but at least it will act as a rust protection for the bottom of the car).
Look for an oil pressure of about 50psi in 4th gear with the engine warm while driving. A significantly lower reading might mean a faulty oil pressure sending unit, a worn oil pump, or worn engine bearings. Running hot indicates a worn water pump, a blocked radiator, or even burned exhaust valves.