look in the water neck, zero rust present in the hoses.
look in the valve cover at the cam. should be smooth and shiny.
look in the turbo housing, should turn easily, and have zero in out play, and slight up down play.
look at the oil filter nuts, they should be pristine nuts, with negligible wear on the points.
take pictures of it and post them here. lots of angles, lots of pictures. use flash!

if you get the motor, I'd change the turbo drain seals, the o-rings on the air filter turbo inlet, and the oil sep drain and the drain tube where it attaches to the oil pan.
certainly change the thermostat, and the housing hose while the motor is out (it's a pain in the car)
all the clear hoses, and the alda hose, and all the braided fuel return hose, and the cigar hose.

__________________
John HAUL AWAY, OR CRUSHED CARS!!! HELP ME keep the cars out of the crusher! A/C Thread
"as I ride with my a/c on... I have fond memories of sweaty oily saturdays and spewing R12 into the air. THANKS for all you do!

My drivers:
1987 190D 2.5Turbo
1987 560SL convertible
1987 190D 2.5-5SPEED!!!

1987 300TD
2005 Dodge Sprinter 2500 158"WB
1994GMC 2500 6.5Turbo truck... I had to put the ladder somewhere!