The TD would fit with no problems. As I mentioned before, a Corrado is pretty much a golf, which works easily with all MKII and MKIII platforms. If you hopped it up, you could get up to 200 HP/400 ft lbs tq. A more reasonable expectation is 110/120 HP with mid 250's for torque.
The 1.6 is usually preferred to the 1.9 TD IDI as it is a better revver.
If you're going TDI, the easiest would be the MKIII TDI as it will pretty much bolt in. The B4 Passat TDI is the next easiest, with the native 1.9 ALH and PD TDI's being the harder ones as you have mount issues. Of course, you could go with a TDI-M as you can use a wastegated or staged turbo setup and a mechanical pump (11 or 12 mm for the big umph).