That sounds similar to my car when I got it. It needed a new short engine. I got one from EMC for £1700 + VAT.
That was for an S. An S2 might be slightly more, but I'd still expect to be paying under 2 grand + VAT. That's assuming that you fit it yourself as well. If you get them to do everything, you could probably add another 500-750 quid (but that's a guess).
As for what the car is worth in that state? Look at the rest of the car and decide what it would be worth if it was a runner with a good engine. Subtract about 3 grand from that price, and that's the most you should pay. The good thing is that you'll have a nice brand new engine in the car, rather than something with 100 and something thousand miles on it.
While you're at it, you could have the engine balanced and a few other bits and bobs done. It all depends on what you want the car for. If you're going to want to go for mods at some point, now is the time to do it, as you'll be either buying the uprated parts instead of the standard ones, or you'll be paying just for the engineering work to modify parts, rather than removing and modifying them.
I wouldn't think it's worth fitting a turbo engine though. There are plenty of other bits that you would also need to change, so you'd probably be cheaper to just go and buy a turbo in the first place.
I considered putting an S2 engine in mine, but it would have cost an extra grand for the S2 specific bits. The difference between and S and an S2 is a lot less than the difference between an S2 and a turbo, so I'd expect that you would be spending a lot more than a grand.
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