If it ain't a rockin it might be a knock'in

Paul W was correct, I had a valve shim that was not making contact with valve stem.
There was a .008 gap between valve and shim. The correct way to fix this would be to remove the head and replace valve that was topped too much. I did not want to do this so came up with an alternative that I will get some flack for? Had machine shop remove some material from retainer and now shim sits lower in retainer and making contact with valve stem.
I would like to report that the engine is once again quiet but I can not, unable to start engine for now. It seems I somehow broke a tooth off the intake camshaft sprocket and will now have to replace. It has the two bolt version with locking plate in four segments. Another learning experience, the hard way. I was able to retrieve the broken tooth, spotting it by accident.
I may have found a better valve stem seal? Comp Cams 519-1 Viton/metal that can also be used on exhaust side. Time will tell if I chose wisely?

Nope, no flack from moi: did the precise thing a fair few times, when folks didn’t want to spend the money to fix it correctly. Taking a smidgen off isn’t too dangerous.

Thanks Paul, now I may sleep better. Now to get sprocket replaced.

Is the 4.2 an interference engine? Trying to limit any more damage.

ALL Jag 6s are interference engines.

That is actually quite a clever idea.

Not sure about the broken tooth on the cam gear though; those things are tough.

As you noted, The valve adjust shim should rock a little bit on the stem:. Just enough so that it is not in contact with the retainer but not the stem. Be certain a shim does not “tilt” and stay tilted when the tappet goes back on. Another method…if the shim sits flat on the retainer but not on the stem, by only a tiny bit: grind a little off the outer flat of the shim around the edge, leaving the center that rides on the stem untouched, thus the thickness of the shim in the center is what you selected for the valve adjust, but the outer edge is tapered thin and the shim rocks a little on the stem. Both methods could be done if needed to gain “rock” space. The shim to retainer issue may be a stem that was topped too much, in which case it would have been that way since that work, , but also valve or valve seat wear over time. As the valve moves up into the seat…the stem moves up toward the shim and tappet.