Headgaskets are usually a go or no go item. They generally tend to be fine or bad. I would start looking for either a plugged up filter, or loose line that cold be allowing for air to enter your fuel system. You say your loosing power in the lower gears, or prob at lower rpm. Means that your pump is not pumping a sufficient volume of fuel to keep it going.

Is your veggie burner a total conversion or two tanks? Can you run it on just plain diesel fuel tank and see if you can isolate what system it is thats causing your problem?

Loss of coolant could be a head gasket, but usually you'll have other signs of failure, You may have a small leak in your heater core, or a bad bypass hose on the engine. While overlooked allot, they get old, and start to drip a tad, and before you know it you've lost a fair amount of coolant.

Why to keep the car?? Simple.. they are an amazing car and fun to work on. While not overly powered, cheap to run and very reliable when and eye is kept on things. I have a 123 chassis wagon, and while it's the 5 cylinder turbo, the basic vehicle is the same as yours. I've replaced my guide rod bushings, shocks, joints etc. I've got almost 350K on it now, and it routinely goes between WV and NJ allot. Best of luck with Buttercup!!!