I'd vote for a MK1 or MK2 VW diesel - more plainly - any VW with a diesel engine, manufactured from about 1976 to 1993 (I'm slightly hazy on those numbers...)
Itll be a 1.5l, or 1.6l motor, return 40+ mpg most of the time, and be old-school indirect injection/mechanical injection (simple). You will only get 40-50hp out of the motor, but thats (just) enough for highway speeds.
The problem with these will be the 20+ year old VW body that surrounds the motor (rust)...

The newer you go, the better things you get - Air conditioning, power steering, 5 speed transmissions... $5k would get you a cherry version of one of these...

The alternative would be a VW TDI, made in newer years - I don't think that $5k would get you much in the way of a TDI....they command crazy resale.

You could get a W123, but it'll be tough to get better than 30mpg in a W123, and where I live diesel is still $.60/gal more expensive than gas so you need noticeably better MPG's ondiesel than a gas replacement. I replaced my 240D with a '97 Jetta 2.0L (gasser) and saved measurable money on gas each month (the jetta got the same mpgs, made more HP and the fuel cost less...)

I always thought that, for now, diesels command such a premium price that if you want cheap transportation, you need a honda fit/Mazda 2/Scion xA or something in that size range, that gets 30+ mpg easily on cheaper gasoline.

-John

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2009 Kia Sedona
2009 Honda Odyssey EX-L
12006 Jetta Pumpe Duse
(insert Mercedes here)

Husband, Father, sometimes friend =)