Synthetic oil will clean all that varnish off pronto, but you will need to change the filter a couple times on the first crankcase of synthetic oil -- it will fill up with crud pretty fast.

I'd say you have no more than a 50/50 chance the tappet will quit rattling if you use synthetic, it's very likely worn out.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!