Murray 12/38 seruois help needed?

I NEED HELP!!!

I purchased a Murray 12/38 or 40702x92e model #'s.
it doesn't have a deck. it has upgraded trans/axle. atv tires. minor things. but it came with the original 12hp briggs #'s are 281707-0155-01-87033111 that's what's printed on the engine. but its bad.

I purchased a simplicity rear engine riding lawn mower for the 10.5hp Briggs engine #'s 257707-0735-01-29040210.
The engine ran smooth quiet almost brand new had 50hours on it and it was 2 years old..

I took the wiring harness and engine off the simplicity.
put them on my Murray. i didn't flush the engine "left gas & oil" now the engine sounds like it has a rod knocking but it runs. it also puffs blue smoke on start up..

I have herd that if i could of pussably tipped the engine to far oil could of gotten to something can't remember what exactly. but i am wanting to know what i could of done wrong. also what could be the problem. and yes i did somewhat tip the engine but not much.