Engine Blew up.. Plz HELP

[Tanya]

Hi everyone, I'll try to make this short.
I own a 1996 volvo 850 with 128000 miles
A few days back i was driving on highway at around 70miles/hr and noticed the oil light coming on/off intermittantly. I stoped the car and checked oil level and found it to be normal. Began driving again and within 20 miles the oil light came on again and stayed on. Thinking that the senosor is just bad, i kept driving. 5 miles later at about 70miles/hr on highway, i heard a little explosion and felt something hit the ground. The engine started rattleing and somoking. I pulled over right away and noticed a big puddle of oil on ground and no oil in engine.. I then got it towed to a volvo dealer and found out the following.
The mechanic told me that he found a baseball size hole around the oil filter and told me the engine is gone. He seemed to think that the oil filter was not either tighten enough or not put into place properly. I told him that i had just recently done an oil change at Mr. Lube and had only put in 250 miles. At this point I am waiting to get a written report from them to see if i can hold Mr. Lube liable for this. I spoke with Mr. lube and was told that if the oil filter and drain plug was on that it would not be there responsiblitly.

Anyhow my question is if it is not from the oil filter, what else could have caused this ??
I already found a engine with 60000 miles for 1000 dollars. the dealer would install it for 1200 more.. is that a good idea ??

Please give me some advice..

Greatly appreiciated
Mazbol

[TKE850T5]

I blew my engine a few months ago........and got a new one from my insurence. $5500.00........covered it all but deductable.