An alternative way to do this might be an LPG Sender assembly, they use an arm/float/Gear drive to a Magnetic coupling, on the out side of the tank is mounted a guage/sender that's available in just about every range known to man! ;)
Not a bad price, depends on what they actually do for the money though, get a detailed list of what's covered and post it up.
Sounds like a good plan, forget a swap of any kind for that money. all you'll end up with is a half finished car/money pit...
Easy "check" would be pull the fuses to the trans or unplug the ECT so no electricity can get to it, if it still makes the noise it's mechanical from the smashed in pan.
I always ran a bit more caster in my Mk3, made it more stable/predictable at high speeds, slight downside was heavier steering at low speeds/parking but it's might help the tramlining thing.
For some reason I thought they were tapered back and front... it's been a long time since I've had a 7M so might be mistaken on this.
Ditto on on the crank plugs.
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