This thread... this f**kin' thread lol.
All that needs to be said in regards to displacement/torque/engines has been. I'd recommend a b18b or b20 if you're going to boost. The 2.0L displacement is a fan favorite for boost, but you really have to do work on that bottom end. The b18b (LS) has slightly thicker walls, but thinner rods, and the pistons are not meant to endure abuse. Get either one, and tear it apart, rebuild as mush as you can (sleeved block, rods, rod pins, pistons, head studs). Do a valve job, and if it's in the budget, go with new seals/valve springs/retainers (not necessary, but definitely peace of mind!).
As far as your friend selling the motor, if you are going to buy it, get in touch with a trustworthy Honda mechanic (or someone that sincerely knows what they're talking about. NOT your friend you mentioned in your first post, that dude doesn't know s**t). Have your Honda dude look over the motor and trans, and if possible, remove the head of the motor. You can initially tell right away by looking at cylinder heads and the block's sleeves whether it's been built or not (most of the time). I don't do trannies, don't know what to tell you there.
Piecing together a turbo kit requires a metric-f**k-ton of research. Look up manifolds, whether you want to retain A/C, power steering, and ABS/Cruise Control, whether you want top mount, clocked to passenger or driver side etc. Then, look into wastegates, what kind you want to go with (V-band flange, 32mm, 40mm,TiAL, Blitz etc.), research tuning (f**king TUNE. NO EXCUSES. DO IT.), intercooler, charge piping, all that jazz. Expect to spend in excess of $1200 to build your kit RIGHT. I started a thread a while back (
here) outlining everything you should look into before boosting. It's a rough guide, to help get you in the right direction. Read it, and apply it.