First, I'd point out in response to the post stating "same power output for a given year," they are quite different engines internally and have entirely different management systems. There were no 240 turbos in '87, and 240 turbos all used k-jet, not the LH2.2 that's found on the '87 donor car. I far prefer the B21FT (240 turbo engine) in terms of durability, but the B230FT is plenty strong provided it's a K block. I believe mid-'87 was the date of change from the weaker, original B230 to the K block. Main difference was a substantial increase in con rod beam thickness (from 9 to 12mm IIRC). Assuming you have the K, yes, it'll be a decent motor for making a fast car. Using that engine/tranny from a 740 will work, but you need to swap motor mounts including the brackets on the block. The tranny mount is different, I think you need to change the bracket that's bolted to the tranny as well but that's a piece of cake. The shifter linkage is different, not any problem if it's an automatic (just unbolts from the side of the tranny at the selector shaft) but a little more involved if it's a manual. You will need to change the tranny tailshaft housing if your 240 has a cable-driven speedo. Again, if it's an automatic, no problem except for getting the old gasket material off of things. Unbolt the tailshaft flange & pull it off, unbolt the housing and pull it, and slide the speedo drive gear off the old tranny, put it in place of the spacer in the new one. Reassemble. This is also a very good time to replace the tailshaft bushing and seal. See the FAQs.
Why do you want to use the original distributor? You won't be able to use the original fuel system - not very well, anyhow... it's going to be easier for you to transplant the system from the donor car. A lot of work, yes, but it'll work right. Since you mention the distributor being different I assume your car hasn't got an LH fuel system, which means very little of the existing fuel or ignition system can be adapted. Don't let this scare you off - it CAN be done. The ignition and fuel harnesses and control units have surprisingly few connections that require much thought to adapt to another vehicle. The only tricky thing, aside from getting the harnesses routed under the dash, is - and I'm working from memory of a similar project several years ago, so this may not be entirely accurate - the fuel pump relay is triggered by an output from the ignition on the non-EZK-ignition 240s, but with EZK ignition/LH2.2 injection, the trigger signal comes from the ECU in response to a signal from the ignition control unit. I may have the particulars wrong, but that's the gist of it. If you've got a decent understanding of basic circuits, you can sort it out, preferably before you tear the 740 apart though. Getting the airbox to fit and the intercooler & hoses installed will also take a bit of imagination but not insurmountable. 240 turbo exhaust should fit fine - don't expect to get away with anything resembling what's hanging on a non-turbo car.
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Chris, Dartmouth NS Canada 70 M-B 280SE, 83 245DL, 84 244 turbo, 90 780 turbo, 92 VW Golf, 90 740 Rex/Regina