We might have been able to find a thrashed 560SEL for $5.5 or $6K. But then it would have needed more work, and had more unknown problems that we'd have to resolve.
Putting a 5.6 liter in the car...well, we could have gotten a used 5.6 liter for $2750, with under 100K miles. Since the 5.6 liter is a different engine than the 3.8, there would have been lots of PITA things that my dad and I wouldn't want to mess with.
Anyway, updates will follow when more progress happens.