Speaking from my own experience: Early this year repowered the with standard (Bud recomended) Betamarine 38. The 38 horsepower (very close to 35) is quite sufficient to push her through seas on the bow, with reasonable fuel consumption.
60 HP is quite a large engine for a W32, and although super powerful, I imagine would suck fuel.
What I feel you must check on however, is the availablity of reasonably priced parts and service for a 30+ year old BMW diesal engine.
Also if you can afford it I would strongly suggest the feathering 3 bladed MaxProp. Great performance in forward and reverse, and almost no water resistance whhile sailing.