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If you are thinking of a Porsche 6 cyl engine I would recomend rethinking that option, it has been done but it is difficult to do correctly because the engine is so long. If it's in the budget, I would recomend a 901 5 speed (the flywheel mod. noted below is not necessary for this trans).
Look for a type 4 from a 411/412 or 914, the bus engines are ok also if they have been maintained well.
To convert a type 4 for use in a bug is easy, you need a 210mm or 215mm flywheel/clutch, an upright cooling system and exhaust. The transmission pilot bearing must be put into the flywheel not the crankshaft so a little reaming by a machine shop is necessary but not expensive.
There are several choices for cooling systems, Porsche 911 style is the coolest but the most expensive (case machining is necessary on all but the Fat shroud). There are a couple of type 1 style shrouds available in the states and europe, stay away from the shroud with the fan in the middle, it must be offset like a stock type 1.
Exhaust is more difficult, build your own header like I did, use shortened heater boxes or heater box replacement tubes or buy a header from europe or Fat performace.
If you want it to be quick and still be not too expensive, here's my recomendation.....Any type 4 case, 2.0L crank and rods, 96mm cylinders (2056cc), 1.8L heads (they come with 41mm intake and 34mm exhaust valves), DIY port job, 9-1 compression, a .040" deck, a cam with about 285 deg duration and .430" lift, a pair of 40mm Dellorto carbs(44mm Webers), an 1 1/2" header with long primaries and collector (custom is best) and you have a reliable 120 HP without much effort, a little more if you assemble it carefully. Be sure to thread all oil passage plugs for pipe plugs so they can't blow out.
Want more power? There goes the budget! 78mm stroke 102/103 cylinders, more agressive cam, light valve train, bigger valves, professional porting, 45mm Dellortos, bigger/better header. 180Hp or more from a 2.6L is easily possible but the HP costs much more $$.
Some people say building a type 4 engine is more difficult than a type 1 engine, I don't see it personally. Any engine done correctly takes some effort, if you just slap some parts together it will run but not at it's full potienial. I have a budget (that's relitive!) 2.0L type 4 based on a 1.7L case. I can't think of a single piece on this engine that has not been reworked or modified for optimal performance.
I hope this helps
ken
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