Engine knocking at cold start, coolant drain.

Hi all, this is whats going on:
2010 gen 3 prius 240000 miles. Oil use not excessive, about a quart every 5000 miles. I did run it a little low on oil for maybe 2000 miles, it was short about 1.5 quart a couple of oil changes ago, but I got no check engine light.
I noticed recently that its using engine coolant, no visible leaks but sometimes I smell coolant around the car and in the cabin. Engine started knocking once in a while at start up, for a couple of seconds. At one point it did it for longer and set the check engine light. I cleaned the intake manifold, egr valve and cooler, new plugs and cleared the misfire codes that it had set. It still knocks at start up once in a while and it's still using coolant.
Dont know much about engines, can the coolant somehow get into the engine and cause bad combustion?
Otherwise the car runs fine, mpg may be down a tad, but not much.
Any Ideas?
Thanks, Troels

 

Complete overhaul sounds like the best long term solution. Is that a DIY project, or should I find a pro?
Anybody know of someone who could do that for a reasonable price in the SF Bay Area?

 

Have to get this done asap, our family relies on the income I generate with that car.
Leaning towards doing it myself, finding a mobile mechanic I can call for help if I get in trouble.
I have lots of questions:
How big and heavy is the ICE? Can I transport it in the back of the prius?
Do I need an engine hoist for the swab? Other specialty tools?
What else should I replace when the engine is out?
Whats the hardest part of the job?
My experience is limited, the hardest things I've done so far is removing the EGR valve and cooler for cleaning and replacing the shocks.
I'm pretty good at following instructions; with access to the Toyota repair manual and a back up mechanic to call if things get hairy, I'm worried, but not scared. Also, anyone on the forum interested in assisting is more than welcome, we could document the process on video. I live in Fair Oaks, Sacramento.
Thanks, Troels

 

Thanks, very informative. That's done with a stationary hoist and a movable car, I assume I can rent a movable hoist and put the car on jack stands. Getting the engine separated from the transmission seemed like the hardest part.

 

No garage, if I do this, it will be outdoors.

 

I think one of these will do: 2 ton Capacity Foldable Shop Crane

 

Watched all 8 engine swap videos on Fix That Prius! but somehow missed the flywheel torquing part, which video is that in?
Not going to modify a gen 4 engine. Any recommendations on where to buy the replacement engine? Remanns has a used engine that comes with a 5 year or 50000 miles warranty for 1,995.00. Value Auto Parts has one with only 63.000 miles on it for 1,650, but only a 60 day warranty. I want to be pretty sure the engine I put in is healthy, dont mind paying a little extra for that.