Well, at least they warranty'd it.
Lots 'o' variables here as you could imagine. To quote you: "- wouldn't that have to be a bearing?"
Quite possibly. A 'knock' could be a flat cam lobe, but it has more of a 'clank' sound. A rod has a very characteristic 'thud' deep in the engine as you describe.
I think what they said, "could be cam is too big or rocker arms aren't made for this motor." is bull puckey.
Best of luck.