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What is your question?
shop says it needs a engine overhaul full of sludge did flushes
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You might try cleaning the two (VVT) variable valve timing filters first, as well as adding a bottle of Marvel's Mystery Oil to the engine oil (follow direction on the Marvel's label), and change oil to synthetic and new Toyota, Wix, or Purolator Pure One filter after 50 miles of driving. Then if you are still having issues, get a second diagnosis from a Toyota dealer / service center. The p0016 indicates a difference between crankshaft, and camshaft position, and the VVT controls camshaft timing when operating properly.