2000 Nissan Xterra engine problems

I have driven my 2000 nissan xterra for almost 2 years now with normal driving, no off road driving or abuse of my vehicle. Recently I discovered that after a few weeks of an overwhelming smell of exhaust in my passenger cabin that the exhaust manifold is in fact cracked. Now on many occasions I have a very young child in my vehicle so I've had to leave him outside till the exhaust smell has dissipated and I can only assume it's no longer making it's way into the cabin.

At 5,000 miles pre warranty expiration my 2000 nissan xterra broke down while pulling out from a stop. After an investigation by nissan, they've concluded that the crankshaft had broke and thus the engine would be rendered useless. They have also stated that they will not cover this under their warranty and will bill me for the new engine. They've said that the engine got sludge due to infrequent oil changes. After providing proof of regular oil changes nissan says that they still will not cover the vehicle.