Mike,
Check out my trials and tribulations at
http://www.vanbran.com/bug/conversion1.htm
Also make sure to check the work from Panelfantastic !
There are many engines you can use, I am not sure that a WBX is the best choice. A lot of Vanagon owners swap these out for Subaru or other engines.
Usually the rad is placed in the front, running the pipes either through the passenger compt or under the floorpan. As to the size of the rad, use the same size (or bigger) than the rad that came originally with the engine. Chances are that airflow will be less than in the original car, so you will need at least the same size.
Hope this helps,
Rob.