I've done several VW turbo-diesel into Vanagon engine conversions. I've done the 1.6TD, 1.9TD (AAZ), Mk3 1.9TDI (AHU/1Z with mechanical pump) and the Mk4 1.9TDI (ALH with mechanical pump). The 1.6TD really isn't any easier to do than a Mk3 TDI with mechanical pump. I really like the ALH engine, but you will have more custom work for installing it. Mk3 TDI will give the same performance and fuel economy with less work for the install. The 1.6TD is also a decent engine. It doesn't have as much power but it still makes for a nice van especially if intercooled and tuned well. Considering the options you have, in that situation the easy choice for me would be to install the AHU at 50° using the diesel mounting parts, ditch the electronic engine management, and install a Land Rover 200/300 TDI mechanical injection pump.