2001 Impala LS? 3.8 auto 73,000 MAJOR trouble

This is actually quite the issue and long story. I will keep it as simple as I can. Bear with me please:)
i had decided to go in on this car with my brother, co-sigining for him to get the car) great looking car looked reliable and it ran great for the test drive. Well two days later my brother was going to washington( from oregon) and heard chattering in the engine. The oil was creamy and when you started the car from cold it would chatter very loudly until warmed. Before the problem was diagnosied the dealership had said they would help with the repair( we bought as is, very stupid, funding was also limited so no extended warrenty) that was when they thought it was just a eg r port or something along those lines, possibley some hose. They also had said that they would swap the car if it was in fact something major. Well as it turns out the car needs a new engine. It will not hold oil pressure and they think that its something internal but as of now are not sure what the exact issue is. When we had asked if any major repairs had been made to the car before we bought it they had said no and the carfax report was clean. But my brother had found a paper in the car saying that they had replaced the intake or head gasket which one I am not sure the paper is in washington with my brother where he is stuck without a working car. Now the dealership will not switch the car like they had said or pay for any cost of repair. And a used engine is going to cost almost 3,000 dollars installed, according to the dealership. I know that a head gasket repair means dismantling part of the engine to get to so doesnt that mean it is supposed to be reported to carfax? And with a repair like that, should they be responsible? What can cause a head or intake gasket to break and what are the symptoms of that? I know that there is a lot of dealership issues in here but whatever anyone knows would help. I do already know that the lemon law does not apply to our case, its only for new cars (or used) that are still under manufactor warrenty. But I still think that a dealership should swap a used car for a different one if it breaks beyond repair even without a warrenty or with an as is sale. A product is a product and should be backed up no matter what by the seller. It does not help my issue that I dont know anything about cars. But any information on this would help and please do help us. Thank you for reading about my car issue.