it is actually not that uncommon in early engines and there are many with it undiagnosed. High oil consumption is about the only way it's generally seen - there's a youtube video from Manu around which shows the knock on a 1.4 and it's significant. You can see the movement of the piston front-to-back. But the previous owner of that car didn't see any issues with it, didn't have any problems.
Personally, I'd either be looking for a young short block or a recon. The piston rings are the main fault here, with their channels not freeing up correctly and over time becoming clogged. I'm reasonably sure I have a similar problem and I know I'm not alone.
I think the majority of fixes have been a new block, but I'd have to check.
- Bret