The main thing you will need is an engine. But, you need other parts too, so sometimes your best bet is to buy a complete vehicle. If you can get one at the right price, you can sometimes part it out (disassemble it) and sell the parts you don't use. Looking for one that has been wrecked in the back end is a good starting place. Check local news papers, especially those that specialize in cars and car parts.
Your search for an engine (and other parts) should start in your own "back yard". Check local sites:
News papers, especially ones like "Greensheet" "Thrifty nickle", "Shopper" or whaever the discount paper is called in your area. These are usually distributed at supermarkets and other local merchants, for free.
Local junk yards, oops, I mean "Automotive Recycling Agents". If price is an issue, first try a "Pick-A-Part" or the "you-pull-it" junk yards. These places let you remove the parts (or complete engines) and charge a fraction of what standard recyclers charge. If you don't have one, try other local salvage sites.
VW repair shops (not necesssarily the dealer, but sometimes the dealer will have used engines or cheap used vehicles). Some VW aftermarket shops tend to specialize - some in diesels, some in race products, but most are general VW shops. They may have an engine laying around.
If you are in a small town, sometimes it is worthwhile to go to the nearest large town and look there.
If you exhaust your local sources, here are some other general sources you might try. Please note that we have not done business with all of these firms, but they have expressed interest in being listed as a source of VW engines and parts. They are not listed in any particular priority order.
The Parts Place - Auburn Hills, MI, 248-373-2300. These guys specialize in VWs. They have lots of new and used parts. They have a nice parts catalog.
International Parts - Jacksonville, FL, 800-825-3121 ext 8066, ask for Tim Young. These guys are a "locator service" for some 3000 junk yards. They will find you an engine and have it shipped to you. They have helped some American customers get 1.9TDs from Canada.
GEX International - CA, 626-960-5341. Ask for Peter. They specialize in new and rebuilt engines. The don't typically have used (un-rebuilt) engines.
Jack at VW Diesel Part - IA, Jack rebuilds VW diesel engines. He prefers to do e-mail communications instead of phone. See his web site at http://www.vwdieselparts.com or e-mail him at firstname.lastname@example.org.
Universal Auto Salvage - Adamsville, AL, 800-553-7859. They specialize in european auto parts and said to have several VW diesels in stock when we last talked.
Small Car Connection - Hesperia, CA, 760-244-9811. They have used VW parts and New parts. Their web site is http://www.chrisvolkswagon.com. (Yes, I know they spelled Volkswagen wrong).
Another source you might try is Ebay at http://www.ebay.com. They are an on line auction service. There are frequently some VW engines, parts, etc listed.
If you find other good sources, please let us know.
Remember, when you are looking for a used engine, you are getting an "unknown". You may decide to rebuild it yourself, you may try to run it as is, or you may want to have it professionally rebuilt. You cannot always assume a "good running engine" is a good running engine. Get some type of written assurance of what you are buying.