Assuming the engine core is rebuildable, there certainly is no reason why it can't be done. I believe one of the main obstacles is cost. Certain parts of a diesel engine, or any engine for that matter, should obviously be replaced during a rebuild. There is some work associated with a rebuild that may or may not be necessary on your particular engine so you may not know the exact cost until you're already into it. Of course, there are sources for diesel engines that have already been rebuilt. I've seen them selling for up to $4000, sometimes even more. If you've read somewhere that it's not possible, I believe they are most certainly referring to the cost. In the case of a 240D, you could probably seek out another 240D in good condition for the price of a rebuild and not be faced with the hassles. If you do happen to have a 240D that is in excellent shape or you are otherwise attached to it you can almost certainly get it rebuilt (for a price). You also have the option of getting an engine out of another vehicle, as you mentioned, which can be risky.