Hi, Just wondering if you made a decision on the car. I also have an A6 C5 Avant with a 2.5 tdi engine. It has covered 314K miles but needs some attention I got the car at 3 years old with 38k on the clock so I have had great use out of it. The car is based in Scotland so corrosion is the enemy. The engine has been out twice, both times to sort the top end.
I am with your Dad, an Audi should have an Audi engine. In you situation I would be tempted to get a donor car with a running engine of the same type. I would then make sure that there are no leaks or noises then check the compression and put a borescope into the combustion chamber.
I just bought an Allroad last week which is 2 years newer and has 90k on the clock but after buying it I am now more determined to keep my original car on the road.