Top end noise

What could be causing this:


I idled the car and pulled spark plugs until it stopped making the noise. Of course, it was cylinder 7. I take the valve cover off, everything looks fine. Push on the rocker on the intake valve in 7, it's loose; bad lifter. I take the lifter out and it's gone. The bottom of it is worn down almost an 1/8th inch from a new one. So much that there's a hole in the bottom, causing it not to hold oil. Expecting a destroyed camshaft, it's fine. I thought that the camshaft was supposed to go before the lifters. What the hell is going on? Have any of you seen this before? I'm thinking there might be too much preload on everything; causing the grinding. I'm currently baffled.

Help is always appreciated from you guys,

Jake