Absolutely, you were driving without oil. No oil and the engine causes a lot of friction and scoring. Not to mention the lucky fact the engine didn't seize. The big puddle was caused because of 1 of 3 things. He forgot to put the oil plug back in or forgot the gasket with it. He did not properly set the oil filter. He forgot to put the new oil filter in. Some damage was absolutely caused but what and to what extent only a complete inspection will tell. He said it was fine only because they don't want to take care of any possible damage or do or pay for a complete inspection as well as ensuing repairs. They are hoping you will wait long enough so when an issue appears, they will claim it wasn't their fault because of time passed and mileage accrued.
What about leaving the oil fill cap off ...that would tend to blow oil all over and smoke. what if he missed the hole and splashed a quart of oil on the engine ?that would smoke and leave a puddle but no internal damage to engine in either case.what if?.........oh never mind they screwed up a little....never mind that it's a 1992 with who knows how many miles and what other pre-existing conditions, make them buy a motor regardless.It's not MY money.But yeah , never mind , it's never the simple stupid stuff.
"absolutely, you were driving without oil" That's quite an assumption for not seeing the car.I'm jus' sayin' ya know cause he did say it started knocking real loud too , didn't he?? OH , My bad..