As Sam suggests, tucking that lump into a Wing frame will require backing up a good distance and getting a run at it, if you hope to make it fit. And be prepared to make liberal use of what I believe you Brits refer to as the blue tipped chisel.
If you've not seen the ultimate mother of all VW diesel bikes, check the pics below. I believe it's the 1.6L. But, no small bike. Likely the most compact form one could conceive, short of an east/west orientation. And utilizing a right angle gear box for the final drive solves the ratio dilemma as they can be had in whatever ratio you desire. It does however leave you with a hardtail and having used little of the original Wing frame.
Should you swap the engine/box end-for-end, you might want to consider some of the options in the link below. Doing so would allow you to adjust your ratios as needed with a simple change in sprocket/pulley and allow you to retain your swingarm suspension. While most of these employ chains, I would prefer a cogged belt drive to reduce maintenance.
That said, have fun. It'll be a great adventure.https://vk.com/topic-60344065_30250678