Decisions decisions....
Wow! You now have my attention... and all my sympathy.
It sort of goes without saying that there may be no perfect answer here.
IMHO, the boat will sell way more easily with a new diesel in it, but probably not for 6.5K more than it would likely sell for in it's present condition. (!)
If you take the real and likely amount it would bring now, with a used but running engine, and then subtract 6.5K from that amount... would it sell as as a project boat? That plan has the sole virtue of allowing you to "move on."
I will go out on a limb and imagine that you have a '79 E-30/2. I know of one that sold within the last year in my sailing area, in the low 20's. It was for sale quite a while for several thou more, with a newly-rebuilt diesel. The owner was trying to get back some of what he spent to rebuilt the Westerbeke that broke a connecting rod out-of-the-blue. I dimly recall that the engine had quite a few hours on it, but had been running fine.
The engine problem happened during regular use, and just as he was starting to advertise the boat. He had it rebuilt at a local boatyard. He thought that fate had dealt him a poor hand -- I agreed.
If the boat is really really clean and turn-key otherwise, you might try an ad for it "sans engine." If, for example (and being speculative) you were planning to ask 24K and accept 22K, you might now market it for 18K and accept 16K. Hurts to even think about, don't it?
One other thing about a new engine, though, is that you get to start fresh with new trans. and panel. This looks really spiffy to a potential buyer, and they get the luxury of buying a boat with a warrantied aux. engine. And then, if it was originally underpowered with a single-cylinder, you will almost certainly be putting back in a twin or small 3 cylinder diesel.
Anyway, best of luck to you in what would be a quandary for any of us.
Best,
Loren in PDX
