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diagnosing cooling system problems 900 1994

I've just got myself a new 940, 1994 sedan, 187K miles, was headed for junkyard... Some amount of neglect, currently runs but overheats, but the body and the interior are good, so I decided to give it a chance. The obvious problem seems to be a major coolant leak, apparently from the water pump shaft (water leaks on the body of the pump from undeneath the pulley). Car seems to have had water in the cooling system for the last few months, possibly more, so things look rusty and dirty in there. Trying to figure out if there's more to the engine problems (blown head gasket??) or if not, which parts would require changing besides the faulty water pump. The leak is quite strong, and once the engine warms up and starts building up pressure it loses water from the block, even before the reservoir empties. Drove the car for ca 40 minutes, it kept overheating (temperature gauge reads just over normal but the old oil on the engine starts smoking -- oil seeems to be leaking a bit too). No signs of water in the oil (haven't changed it, just checked the dipstick), once the dirty water from the radiator gets to reservoir it looks brownish, but this looks more like rust than oil to me. Just trying to figure out a strategy to see if the engine is worth saving and working on. This car is purely a project at this point. Any help with how to get things diagnosed at a reasonable cost would be appreciated. Thinking to replace the water pump, and see if it makes things better but afraid it would be a waste if it turns out the engine is toast... Thanks!
--
'98 965






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