Not sure how any of the rag could get into the oil pan area via a cylinder, as the cylinder is blocked by the piston and rings, and the intake/exhaust doesn't lead to the lower end at all. However, I would think it's
possible, though not probable, that he may have a broken ring or a cracked ringland, though I am uncertain what kind of sound that would result in. Also, a wrist pin can make a ticking sound, for what it's worth. And finally, if the OP has enough mechanical aptitude to have done this work (but is human enough to have made the mistake of leaving the rag in the intake), he probably would be able to tell when he has developed a slight exhaust least. But that could also be the source of his ticking sound. Hell, belt noise can result in a ticking sound. As
@CodaMan has said, it makes a world of difference whether or not it's a tick or a knock. Let's hope for a tick!