Usually you should hear the noise increase speed with engine RPM.

If the noise is coming from the valve train it should sound like it's happening at half the engine RPM. If it's from the bottom end it will be the same RPM.

If it's an injector ticking, it's still worth buying, it's a quick relatively inexpensive fix. Cam phasers will run you a lot more, but once they are dealt with the 5.4L 3v is rock solid so long as spark plugs are changed at least every 50,000 miles if you use Autolite/Motorcraft plugs - aftermarket one piece plugs you can let go to regular 100,000 intervals.

If it happens only when the engine is cold, and sounds like it's from the bottom end it might be a little piston slap (due to the tight tolerances of the modular V8) - this is generally not a problem just annoying but it should be addressed. Over the long term it can be a problem but short term it's not. Simply switch to 5w30, synthetic oil to give the pistons a little extra cushion during warm up. And stick with Motorcraft filters in that case. They use rubber anti-drainback valves in the filter instead of nitrile, which holds oil in the filter during startup so the engine gets lubricated faster.

Now, back to cam phasers.... it will be a loud ticking noise at the front side of one or more valve covers. If it's coming from elsewhere on the top end then it might be injector tick. Its very hard to explain what they sound like. It's not mild, like tapping a piece of metal, but more of a harder bang/tap noise almost diesel like. Here's:



If it sounds like a slapping noise instead of that phaser noise above - at the front of the enngine, on either side, it's probably one of the timing chain guides, and I'd pass on it.

 

It's not expensive parts wise, or too labor intensive for someone who knows how to handle it... but the shops charge out the arse for it. If he can do it you can probably use the noise to your advantage to bargain down a good price. You can either replace the phasers, or lock them out. Locking out insures it will never happen again but you'll lose about 20 hp on the low end.

 

Good luck with it, I hope you score!

 

Hope you run across something else within your budget. The 2004+ are holding value well.