the cheapest, and easiest way, as its an mpi to start with, would be to just drop the engine straight in.

you will probably need to swap a few odds and sods, alternator brackets, a coolant elbow, flywheel guards etc.

it will work pretty well on the stock gti ecu, though you may need an fse or something to up the fueling a tad. a better idea would be to use the same ecu as the engine you get, and the correct inlet manifold to match.

but yeah, the 1.6 or 1.8 engine works pretty well with the gti ecu, you might get a bit more power and a bit better economy from the proper ecu for the engine, but not huge amounts.

1.6 or 1.8 - depends what you can get for how much. 1.8 has more power and more torque out of the box, tuning wise they can both be taken upto the same sort of levels, but the 1.6 will need more revs to make the same power. a 1.6 should feel like a beefed up gti engine, the 1.8 feels a bit lazier and a bit breathless at the top end, but pulls like a train from low down.