Vincent, VKZ24, has an S197 GT and, holy shit is that thing fast. From what I recall, it's not even that heavily modified - stiffer suspension, Raybestos ST43s, Hankook R-S4s, and probably some little stuff here and there.
My personal recommendation, worthless though it may be, would be to start with a 4.0 V6, and then down the road if you really, really feel like you need more power, look to swapping it for the 3.7 Cyclone. It may not sound like much, but a torquey 200hp manual car is plenty fast for racing. An E36 328i doesn't even have that much power, and they're capable of winning overall. You can have plenty of fun with the 'slow' V6, as long as you don't blow it up.
Semi-Sentient Centenarians
1996 Buick Century - we upgraded our crappy GM sedan with parts from a crappy GM minivan.
"It's got a van motor, a 220 cubic inch plant, it's got van tires, van suspension, van shocks. It's a model with the catalytic converters ripped out so
it'll run good on regular gas. What do you say, is it a racecar or what?" - Blues Brothers, Probably