The KT series of motors bankrupted Kohler. The JD 317s engines where failing so fast that JD brought back the JD 316 with an Onan motor in it just to fill the size need.
The KT17 usually broke the connecting rods. That usually tore up the block internally when it happened. Short blocks and parts have been hard to get for 15 years. I would forget fixing the current motor as it has basic design issues. So your best choice is a repower with another motor. The trouble is that a GOOD JD 317 is only worth maybe $500-700 now. The "new" repower kits are over $1400.
If you want a good dependable mower then the repower is not that bad of a way to go. The trouble is the newer JD 325s and 345s can be bought for around the $1500-1700 mark. You get foot pedal hydro controls and a much better mower deck for about what you would have in the other mower.
So your friend of a friend is not really giving you much of a deal. That JD 317 with the knocking motor is worth maybe a few hundred at the best. The deck had better be good even for that. They had a solid metal top cover over the belts. This would get grass clipping under it. If the mower was washed or left out side the clipping would get wet. Then the decks would rust out from the top.
Here is a link to the page on Small Engine warehouse for the KIT. You are getting the motor, wiring, muffler, and instructions to make the new B & S motor work. I have installed their kits they are pretty complete.
The real mystery to me was why the KT engines failed so erratically. Two neighbors could have bought a JD 317 and treated the mower exactly the same and one might still be running 20 years later and the other blown up before it was two years old. We never could figure out what made the difference. I will tell you this. I think it has some thing to do with balancing. Any KT 317 motor that failed but was rebuildable usually failed after being rebuilt.
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