chk eng light on, dipstick had little sludge on bottom. added oil.

The light you are seeing is a low oil pressure light and not a oil level light. If the oil level is correct and the oil pressure light comes on then the chances are good that your engine can no longer build up enough oil pressure to properly open the valves causing it to not run correctly. The oil pickup tube can become clogged with sludge causing this issue or the tolerances inside the engine have become to worn to allow a build up of pressure. You can change the oil for troubleshooting purposes but it sounds like the engine is worn beyond repair. Its hard to tell without looking at it though.