Prices on ebay are generally "as high as the market will bear" because it's a free market with competitive bidding. But they accurately reflect market prices for goods. People aren't going to pay a higher price on ebay than they know is available elsewhere.
I think you're going to have a hard time coming up with a turbo motor for $400 or less. I think the local junkyard wants like $300 for a 4 banger Nissan Sentra motor these days and that's with you pulling it and no warranty. Real 1.6 TD engines, they are getting rare and valuable these days and people know what they're worth usually. You might get lucky and find one where someone doesn't know what they've got but you will have be very patient and check craigslist constantly for the opportunity to arise and you will have to be ready to go and buy right now, and you may have to travel quite a ways to get one. You may also find whole cars are sometimes cheaper so that may be an option if you find one that isn't running or is rusted out.
A electronic swap from a wrecked TDI is going to be your best bet hands down.. depending on the cost of the donor and your abilities.. It could be very worthwhile.You'd spend similar money to get a 1.6 ANYWHERE NEAR the power of a mild TDI... Think about that one.
Also fwiw an AHU / ALH will get about 30% better fuel economy than an IDI diesel
...BTW your Bieber avatar is awesome.-Malone
if i find some amazing deals i might fiddle with biodiesel. i don't think the math adds up to a lot of money saving for the time investment, making it at home i mean, but it could be fun.