I would not give up on that VW motor too soon. However, you will need every pony that it will produce to make that boat go. If you have a weak (or non-existent cylinder) fix that fixed first, before considering a re-power. (JMO) Fortunately, VW parts are cheap (cheap being a relative term) and easy to come by. Looks like you have a nice clean set-up on that boat. I bet it will work good once you get the motor right and the prop straightened out.....

Flathead