Pearson 31 engine
The P31-II came with a Yanmar 2G diesel. This is an excellent engine. Go to any marina and half the 30 ft class boats will have this engine. The P-31 is well laid out and the engine is very accessible. Installing a new engine should be a fairly straight forward operation given that the engine mounts and prop shaft are in good shape. Go for the inboard. This is too much boat and way too heavy for an outboard. I'd guess that it would be very difficult to handle with an outboard. That is a bad idea.