2005 Honda Civic timing belt tensioner...NEW ENGINE??
 

So I have a 2005 Honda Civic LX. It has 149K and I have treated it well. I had the timing belt done at 75K as a preventative maintenance. The cat converter went around 120K. I was close to another timing belt so I told them to fix that while they were in there, as preventative again. All of this was done at Dobbs Honda Dealership here in Tucson.
After that timing service was done, it ran another 13K and I got a "crankshaft sensor" code. I decided after the previous $2,400 repair, I would DIY this one. I tore into the timing and found the crankshaft sensor had the timing belt tensioner spring buried in it. I replaced the tensioner, tensioner spring, timing belt, crankshaft sensor and valve seals. I called Honda and informed them of the findings. It was outside their 12K service warranty, go figure. They gave me a $300 credit after a lot of complaining. The car is now at 149K, back in the Honda Dealership with a shredded timing belt and now they are telling me I need the following...Timing belt repair, thermostat plugs, alternator, they also recommend adjusting all 16 valves. Also the a/c was squealing when in use. They informed me all the repairs weren't worth the money. They offered a new engine for around $5,200. Obviously, I will not go with their "new engine out of a salvage yard with 113K on it". I also installed the valve seals wrong and they had "leak down" of 78% in one valve and almost 50% in another. They said it should be less than 10%.
Should I attempt to have this repaired or cut my losses and scrap it?

For $5k repair cost, it would be the cost to purchase another similar car in running condition. Ask for a second opinion at an independent shop.

You were the last one to work on the timing belt, so it seems it would be your fault. Generally what you do here is put on a new timing belt and see if the engine runs OK. If it does, fix any other problems and the car is good to go. If there is damage to the valves causing a dead cylinder(s), replace the head or the whole engine. Used engines, especially the D17A1 non-VTEC used in the DX and LX, are not very expensive.