Found this info on the 'net:
"Palmer 60 Marine Engine Parts: The Palmer 60 marine engine (P-60, M-60) was adapted from the C-60 tractor engine built by International Harvester for use in Cub and Cub Lo-boy tractors. It is a very sturdy, smooth running engine that is rated at 22 horsepower @ 3,000 rpm, perfectly suited to be the auxiliary power plant for small to medium sized sailboats. "
Probably a decent choice back in the day. However, that 'day' was a rather long time ago.
Unless you like tinkering as much or more than sailing, it's likely time to repower that boat with modern technology. I betcha a Betamarine 25 would do the job very well.
It really depends on how long you plan to keep the boat and how much you are out for the purchase $. I always use "ten years" as a reference point... i.e. keeping a boat ten years provides enough time to amortize out major improvements and maintenance.
For a rough real-world comparison, I spent approx. 10K for the new Beta25 with trans and panel, on a pallet. I did a lot of the work for the removal/reinstall, but still paid about 3 or 4K to a professional for an accurate install with changes to the bed logs and associated system upgrades.
100% worth it, for me.
For your situation... only you can know.
Edit: just noticed the info on Sailboat Data, that this model is shown with a V-drive. While the drive train is out, have the V-drive rebuilt as well.