what kind of warranty did he say you have?? if its a third party warranty you'll struggle to get any money out of them if its had major work done like an engine change.
didn't you notice the chalk marks when you bought it or get it checked over by a mechanic? if he said you had a warranty surely you must have got him to give you something in writing rather than taking his word for it?
as s**t as it, you don't have much comeback when buying used cars as they are normally sold as seen so you might have to accept it & pay up yourself. Failing that, I'd keep phoning & driving down to see him, threaten him with trading standards and if you are lucky he'll fix it to save the agro