Ross/Eagle is always a good piston/rod combo, some bigger cams (264's or 272's would be good), upgraded valve springs wouldn't hurt but are probably not nessicery for what it sounds like you want. A 68HTA or a 20G would do fine, and ECM link.

You could also go with the penny pinchers favorite 1G rods & 2G pistons.

http://www.dsmtuners.com/2g_dsm_turbo_upgrade_path

What exactly is wrong with the current engine? What is the condition of the driveline? There are many ways to reach your goal. You could just do a 6-bolt complete swap or build the current motor or build a 6 bolt bottomend with 2g head. Like artist said cams help and a 20g or 50trim bolt-on should cover your power goals. Making the rest of the driveline reliable is another aspect to consider.

Eagle/wesico combo is a great starter, 50 trim, cams and fuel upgrades along with a good tune should easily put you into that range.

Look at my mods list. I'm going for the 400AWHP goal. I just haven't picked my turbo yet. I am thinking about the HX35 just because of spool.

If I went with Shep trans do you think the stage II would be fine for 400awhp?

id says depends on how your going to drive it. My buddy had a shep stage 4 with all the bells and whistles and it was such an amazing tranny. Was literally bullet proof he ended up selling the tranny with 700 miles on it for $1800 due to him blowing the motor in the car and just parting it out. So someone got a steal on that

This is going to be a long post, so I'm breaking it up into 2.

The current problem:
The problem with the current engine is unknown. It's been a while since I looked into it, but from what I remember boost was leaking into the crank case and the powerband was very sharp. Up to roughly 3000rpm there feels like maybe 30hp (just enough to push the car) then instantaneously full power was unleashed, often leading to chirping all four tires with no effort.

The problem started after we fabricated a turbo inlet pipe out of a steel exhaust pipe. We're nearly 100% certain no metal flakes went into the engine and the only real difference was the geometry and flexibility of the pipe.

My current theory as to what happened is that the pipe messed with the parameters of the computer. This could account for the major loss in horsepower until that magical rpm; but I still don't understand the speed at which the turbo seemed to spool up when it got there. This is kind of out there, but to me it best relates the only change made to the problem.

As for buying a second block. I'm fairly certain I can do a simple rebuild and possibly a few tweeks to get it running decent again; but I would really like a backup engine I can always throw in just in case. Which will be the current one.

The new build:
I've noticed Wesico to be a very common upgrade on these cars; how much of an advantage would Magnus give? Or would that be too overkill for this application?

Would it be in my interested to build a 4G64 block? I like the idea of having more lower end power; but how much of an advantage/disadvantage would this be? And what would be a guesstimated price difference?

I used E-manage on my 3KGT and the difference if quite substantial. I couldn't find much info with the search function when it came to DSM so can anyone point me into a direction as to whether this is a good idea or not?

What about the head and injectors? Are there any reputable after-market heads or someplace I can send a stock head to? Injector size is one thing I'd like to minimize. What size/brand should I start looking into?

Finally, is there a magical turbo that starts making power around the 3000rpm range and pulls through 7000rpm with minimal turbo lag? I can always go big later if I feel like turning this into a full race engine; but for a DD less lag = more fun.

I know there are alot of questions here, several of which are definite newbie questions. So with that I thank anyone that can help, or at least point me to where I can do the research.

Another good option to look into is the 1G rods and EVO 9 pistons. I am running these and it handle 25 psi daily on a 50 trim and will now see a Borg this summer at about 33 psi. The 1G rods have been known to handle near 600 whp and the EVO 9 pistons are forged.