Be careful- the 1.6l N/A engine has some major internal differences.
- no oil jets for the pistons
- weaker con rods
- different (weaker) non hypereuretic pistons
- different (smaller) injectors with an release pressure of 138bar instead of 150 to 158bars
- depending on output several different cams: the more power the later the intake opens and the earlier the exhaust closes
- different exhaust valves to withstand higher heat
You might trim the 54hp engine to some more horses. But the fun is not for long as the parts will not withstand the higher pressure
The intercooler shown is not worth to be plumbed in. The huge unit of the Mercedes Sprinter does cost the same and is a direct replacement, bigger as the radiator itself.It has a net size of 31" and the same height as the radiator. It is the most common used intercooler for tuning the VW's in germany. Bercause it is cheapo and offers outstanding performance.
The original 1.6lTD can be boosted up to 120hp- but expect a head gasket fail every three month. Cracks will develop between the intake and exhaust valve and ruin the head.
To run that power stable you need an added air/oil cooler.