Long shot: verify that the bad engine has the correct oil dipstick. This error happened to a friend during dealer service and it cost them an engine.
Sorry went Offline for so long. In short, I got the new reman motor installed and it has run some 700 miles(with a single oil change at 500 Miles). The run-in period is supposed to be about 3K miles. Using conventional oil as suggested by the manufacturer. Keeping fingers crossed.